USD/JPY flirting with session lows, 113.00 mark back on sight

   “¢   The USD extends overnight losses triggered by Powell’s dovish comments.
   “¢   Upbeat Japanese retail sales data provides an additional boost to the JPY.
   “¢   Bearish traders seemed rather unaffected by the prevalent risk-on mood.

The USD/JPY pair extended its steep intraday slide and is currently placed at the lower end of its daily trading range, around the 113.25 region.

The pair extended overnight retracement slide from two-week tops, levels just above the 114.00 handle, and remained under some intense selling pressure through the Asian session on Thursday amid a follow-through US Dollar selling bias.

The Fed Chair Jerome Powell’s awkward dovish turn, saying that the interest rates are just below neutral, kept the USD bulls on the defensive and was seen exerting some heavy downward pressure on the major.  

The Japanese Yen got an additional boost from today’s stronger than expected Japanese monthly retail sales data, showing that sales grew at the fastest pace in 10-months in October.

Meanwhile, bearish traders seemed rather unaffected by the prevalent risk-on mood, as depicted by a positive tone around equity markets and which tends to undermine the JPY’s safe-haven demand.  

With the USD price dynamics turning out to be an exclusive driver of the pair’s downfall on Thursday, marked participants now look forward to the release of the minutes from the Nov. FOMC meeting.  

Investors are now pricing in only one more rate hike in 2019 and hence, the minutes will be closely scrutinized to see if other policymakers’ also thought that interest rates are just below neutral.  

The Fed’s policy outlook for 2019 will play an important role in driving the near-term sentiment surrounding the greenback and eventually provide some fresh directional impetus.

Technical levels to watch

A follow-through weakness is likely to find some support near the 113.00-112.95 region, below which the pair is likely to accelerate the fall towards the 112.60-55 horizontal support.  

On the flip side, the 113.60 region now becomes immediate strong resistance, which if cleared might assist the pair to make a fresh attempt towards conquering the 114.00 round figure mark.