USD/JPY drops to fresh session lows, back closer to 108.00 handle

  • Bulls failed to capitalize on the overnight rebound and shrug off a modest USD uptick.
  • Rising US bond yields and hotter-than-expected US PPI did little to lend any support.
  • Technical selling below 200-hour SMA intensifies the intraday slide in the last hour.

The USD/JPY pair dropped to fresh session lows in the last hour, with bears now eyeing a move towards challenging the 108.00 round figure mark.

Having failed to capitalize on the overnight goodish bounce further beyond mid-108.00s, the pair came under some renewed selling pressure on the last trading day of the week and seemed rather unaffected by a fresh wave of US Dollar buying interest. 

Against the backdrop of Thursday’s hotter-than-expected US CPI report, the latest US Producer Price Index (PPI) also came in stronger than consensus estimates and further dampened expectations for an aggressive monetary easing by the Fed later this month.

The same was evident from a follow-through pickup in the US Treasury bond yields, which underpinned the greenback demand but failed to impress the bulls. Even a positive trading mood around equity markets failed to lend any support or stall the intraday slide. 

The lack of any progress in the US-China trade negotiations – reaffirmed by not so optimism comments by the White House adviser Peter Navarro seemed to be the only factor underpinning the Japanese Yen’s safe-haven demand and exerting pressure on the major.

Meanwhile, the latest leg of a sudden drop of around 20-pips over the past hour or so could further be attributed to some intraday technical selling below 200-hour SMA as traders look forward to comments by Chicago Fed President Charles Evans for a fresh impetus.

It would now be interesting to see if the pair is able to find any buying interest at lower levels or the current pullback marks the resumption of this week’s rejection slide from the 109.00 handle, or six-week tops set on Wednesday – ahead of the Fed Chair Jerome Powell’s dovish remarks.

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