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  • A combination of factors prompted some fresh selling around USD/JPY on Thursday.
  • Retreating US bond yields weighed on the USD and exerted some downward pressure.
  • The risk-off mood underpinned the safe-haven JPY and contributed to the selling bias.

The USD/JPY pair maintained its offered tone through the mid-European session and was last seen hovering near the lower boundary of its intraday trading range, below the 109.00 mark.

The pair failed to capitalize on the previous day’s goodish rebound of around 75-80 pips from the 108.55 region, or over one-week lows and met with some fresh supply on Wednesday. This marks the fourth day of a negative move in the previous five and was sponsored by a combination of factors.

As investors looked past hawkish FOMC minutes, a modest pullback in the US Treasury bond yields prompted some fresh selling around the US dollar. On the other hand, a softer risk tone underpinned demand for the safe-haven Japanese yen and exerted some downward pressure on the USD/JPY pair.

Market participants now look forward to the US economic docket, featuring the release of the Philly Fed Manufacturing Index and the usual Initial Weekly Jobless Claims. Apart from this, the US bond yields will also influence the USD price dynamics and provide some impetus to the USD/JPY pair.

From a technical perspective, the emergence of some fresh selling on Thursday suggests that the recent downtrend witnessed over the past one week or so might still be far from being over. Hence, a subsequent fall to the 108.55 area, en-route the 108.35 region (monthly lows), looks a distinct possibility.

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