USD/JPY hits nine month lows under 103.00

• US dollar under pressure across the board, DXY at the lowest since April 2018.
• USD/JPY heads for the lowest close since March 9.

The USD/JPY dropped below 103.00 for the first time since March on Thursday and bottomed at 102.86, the lowest level since March. The pair is falling for the third consecutive day amid a weaker US dollar across the board.

Stocks in Wall Street are rising modestly. The Dow Jones rises by 0.39% and the Nasdaq 0.42%. Despite risk appetite, the yen is performing well across the board.

The prospects for more fiscal stimulus in the US helped market sentiment while on the opposite, rising COVID-19 cases continues to be a concern. Economic data in the US showed a resilient housing sector and an unexpected increase in initial jobless claims to the highest level since September.

In Japan, the key event ahead is the central bank meeting on Friday.  The most likely scenario is a no change in the monetary policy setting, keeping the rate -10bps and the 10-yr JGB yield target at 0.00%. “We expect the BoJ to extend its emergency lending facilities beyond the current run-off date of 31 March 2021. We expect the yield curve control policy to stay unchanged,” said analysts at Danske Bank.

USD/JPY bearish trend reinforced

From a technical perspective, the negative momentum will remain intact while USD/JPY holds under 103.10. A recovery above could alleviate the pressure. Under 102.85, the next strong support could be seen at 102.50. The downtrend at 105.30 is the critical resistance.

Technical levels