- USD/JPY witnessed some heavy selling on Wednesday amid a broad-based USD weakness.
- Technical selling below the 105.00 mark further aggravated the intraday bearish pressure.
- September monthly swing lows, around the 104.00 is the next relevant target for bears.
The USD/JPY pair continued losing ground through the early North American session and tumbled to fresh one-month lows, around the 104.60-55 region in the last hour.
Following the overnight modest pullback from the 105.75 region, the pair came under intense selling pressure on Wednesday and was being pressured by the bearish sentiment surrounding the US dollar. Positive developments surrounding the next round of the US fiscal stimulus raised prospects for more government borrowing and sparked a selloff on the US bonds. The lack of demand for government debt was seen as one of the key factors that continued exerting downward pressure on the greenback.
It is worth recalling that hopes for a pre-election stimulus package revived after White House chief of staff Mark Meadows said on Tuesday that House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have made good progress on stimulus talks. Adding to this, the US President Donald Trump said that he was willing to accept a large aid bill, despite opposition from his own Republican party in the Senate. Investors, however, remained sceptic as negotiations are set to continue on Wednesday.
Apart from this, the prevalent cautious mood – as depicted by a flat opening in the US equity markets – extended some additional support to the safe-haven Japanese yen and further contributed to the USD/JPY pair sharp slide. The downward trajectory took along some short-term trading stops placed near the key 105.00 psychological mark. A subsequent fall below the previous monthly swing lows aggravated the intraday bearish pressure and dragged the USD/JPY pair to its lowest level since September 22nd.
It will now be interesting to see if the pair is able to find any support at lower levels or continues the bearish fall amid extremely oversold conditions on intraday charts. Nevertheless, the stage seems set for further weakness, possibly back towards challenging September monthly swing lows support near the 104.00 round-figure mark.
Technical levels to watch
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