- USD/JPY witnessed an intraday turnaround from near one-month tops set earlier this Friday.
- Some aggressive USD long-unwinding trade led to a sharp intraday slide of nearly 200 pips.
- The downward momentum seemed unaffected by a recovery in the global risk sentiment.
The USD/JPY pair weakened further below mid-109.00s and has now retreated nearly 200 pips from near one-month tops set earlier.
The pair failed to capitalize on its early Asian session positive move and started correcting from the 111.35 region amid some aggressive US dollar long-unwinding. The pair eroded a major part of the previous day’s strong positive move and for now, seems to have snapped three consecutive days of winning streak.
A coordinated effort by central banks across the world – to calm investors’ nerves and ease fears about tightening liquidity conditions – prompted some USD profit-taking on the last trading day of the week and was seen as one of the key factors behind the pair’s ongoing corrective slide.
Meanwhile, the downfall seemed rather unaffected by a goodish rebound in the global risk sentiment, which tends to undermine the Japanese yen’s safe-haven demand. Investors’ appetite for perceived riskier assets was evident from a positive mood around equity markets, albeit did little to impress bulls.
Apart from this, possibilities of some short-term trading stops being triggered on a sustained weakness below the key 110.00 psychological mark further seemed to have contributed to the pair’s heavily offered tone. It will now be interesting to see if the pair is able to attract any dip-buying at lower levels or continues with its retracement slide amid absent relevant market moving economic releases.
Technical levels to watch
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