USD/JPY drops to 138.50 as US credit downgrade dents dollar sentiment

USD/JPY has declined 0.6% to trade at 138.50, as the recent downgrade of the United States' credit rating weighs on dollar sentiment. The move by a prominent credit agency highlights concerns over the US fiscal outlook, prompting investors to reassess their positions in the greenback. Consequently, the dollar has weakened against major peers, including the Japanese yen. The USD/JPY pair now faces immediate support at 138.20, with a break below this level potentially triggering further losses toward 137.50. On the upside, resistance is seen at 139.00 and 139.50. Traders will closely monitor US economic indicators and Federal Reserve comments in the coming days to gauge the impact of the credit rating action on the central bank's policy stance. Disappointing data or dovish remarks could exacerbate the dollar's weakness against the yen.