USD/JPY extends slide toward 108.50 as Brexit optimism fades

• Concerns over UK parliament rejecting Brexit deal weigh on market sentiment.
• US Dollar Index struggles to pull away from multi-week lows.
• Upbeat earnings figures allow Wall Street to push higher on Thursday.

The USD/JPY pair climbed higher toward the 109 handle during the European Trading hours as the announcement of the  Brexit deal made allowed risk-on flows to dominate the markets. However, concerns over the deal failing to receive enough support from parliament after the Democratic Unionist Party formally said that they will be rejecting the proposed agreement caused the market sentiment to turn sour and weighed on the pair, which was last down 0.15% on the day at 108.58.

In addition to the changing risk-perception, the broad-based selling pressure surrounding the Greenback on Thursday forced the pair to extend its losses.

Dismal data hurt the USD on Thursday

The data published by the Federal Reserve revealed that industrial production and the manufacturing production contracted by 0.4% and 0.5%, respectively, in September. Additionally, the US Census Bureau announced that housing starts in September fell 9.4%. As of writing, the US Dollar Index is at its lowest level since late August at 97.60, losing 0.4% on a daily basis.

Meanwhile, upbeat third-quarter earnings figures helped Wall Street’s main indexes start the day on a positive tone despite the souring market sentiment. Nevertheless, investors are likely to stay close to safe-havens while waiting for the UK parliament to vote on the proposed Brexit deal on Tuesday.

Technical levels to watch for