USD/JPY marks in a new August low on global Turkey fears

• USD/JPY gaps down on broad-market risk-off flows.
• Turkish banking contagion hobbled the market's chances of a risk recovery last week.

The US Dollar has gained against everything except the Japanese Yen, the FX market's safe-haven of choice as traders go full risk-off mode, dragging the USD/JPY into 110.40 on Monday's opening action.

The Dollar-Yen pairing gapped into 110.45 on the week's open as risk flows continue to reverse gear on widespread fear of Turkish banking contagion, sending the USD/JPY into a new low for August. The US Dollar is set to close the opening gap quickly in early Asia trading, but continued shortside pressure can be expected to resume throughout the week, with JPY traders keeping their eyes on Japan's Trade Balance figures, due much later in the week on Thursday.

Monday's economic calendar is spread thin with little impactful data for the day, leaving broader markets at the mercy of contagion headlines as traders grapple with an increasingly risk-off environment.

USD/JPY levels to watch

Technical indicators are warning of further downside for the USD/JPY, according to FXStreet's own Valeria Bednarik: "technically, the risk for the pair is leaned to the downside, although the bearish potential is limited, given that in the daily chart, it keeps holding above its 100 and 200 SMA, with the shortest heading north above the larger one. In the mentioned chart, the Momentum indicator stands pat around its mid-line, while the RSI gains downward traction at around 44. In the shorter term, and according to the 4 hours chart, the pair offers a neutral-to-bearish stance, as it is developing below its 100 and 200 SMA, with the shortest crossing below the larger one and both in the 111.30/40 region, while technical indicators recovered, heading up right below their midlines."

Support levels: 110.50 110.20 109.80

Resistance levels: 111.30 111.60 111.90