USD/JPY remains depressed near seven-week lows, around mid-104.00s

• USD/JPY remained under some heavy selling pressure for the fourth consecutive session.
• The global flight to safety provided a strong boost to the JPY and weighing on the major.
• Bulls seemed rather unimpressed by a modest USD strength, weaker US economic data.

The USD/JPY pair maintained its heavily offered tone through the early North American session and refreshed multi-week lows, around mid-104.00s in the last hour.

Following an early uptick to the 105.15 region, the pair came under some renewed selling pressure and drifted into the negative territory for the fourth consecutive session on Thursday. The downfall was exclusively sponsored by a strong pickup in the demand for the Japanese yen and seemed rather unaffected by a modest pickup in the US dollar demand.

The global risk sentiment took a hit after the Fed on Wednesday failed to offer any clues about any additional monetary stimulus. The Fed also upgraded its economic outlook and projected a much shallower contraction in 2020. This, in turn, prompted some USD short-covering move, albeit failed to impress bullish traders or lend any support to the USD/JPY pair.

The JPY was further supported by the Bank of Japan’s less gloomy view on the domestic economy and largely shrugged off dovish comments by the BoJ Governor Haruhiko Kuroda, saying that the central bank would not hesitate to add monetary easing. In the post-meeting press conference, Kuroda further indicated the possibility for rates to go lower than current levels.

The USD/JPY pair remained depressed near the lowest level since late July and failed to gain any respite from softer US macro releases. In fact, the Philly Fed Manufacturing Index matched consensus estimates and edged lower to 15 in September from 17.2 previous. Separately, the Initial Jobless Claims, Building Permits and Housing Starts all fell short of market expectations.

Meanwhile, technical indicators on hourly charts are already flashing oversold conditions and warrant some caution for bearish traders. Hence, any subsequent weakness is more likely to find decent support near July monthly swing lows support near the 104.20-15 region.

Technical levels to watch