Risk-off mood hits Asian stocks as Nikkei drops 2%, pressures USD/JPY

Asian equities are experiencing broad-based selling pressure, with Japan's Nikkei 225 plunging over 2% to trade below the 47,000 level, while Chinese indices reversed early gains with the CSI 300 down 0.6% and Shanghai Composite falling 0.3%. The risk-off sentiment is spreading to US markets, as S&P 500 futures decline 0.4% ahead of the European session. This deterioration in market sentiment typically benefits safe-haven currencies like the Japanese yen and Swiss franc, potentially weighing on risk-sensitive pairs such as AUD/USD and NZD/USD. The sharp reversal in Chinese stocks after the lunch break suggests waning investor confidence in the region's economic recovery. Technical traders should monitor key support levels on USD/JPY around 149.50 and EUR/JPY near 162.00, as further equity weakness could trigger additional yen strength. The negative sentiment may persist through the European session, potentially affecting high-beta currencies and commodity-linked pairs.