“¢ The prevalent USD selling bias keeps a lid on any follow-through up-move.
“¢ JPY further benefits from safe-haven flow amid weaker European equities.
“¢ Holiday-thinned liquidity conditions might help limit any deeper losses.
Having posted weekly tops, around the 113.20 region, the USD/JPY pair started correcting and dropped to fresh session low in the last hour.
The pair struggled to build on its steady climb witnessed over the past two trading sessions, with a follow-through US Dollar selling bias exerting some fresh downward pressure on Thursday.
The USD continues to be weighed down by the latest disappointment from the US durable goods orders data and speculations that the Fed might pause the rate hike cycle as early as spring 2019.
Last Friday, the Fed Vice Chair Richard Clarida raised concerns over a potential global economic slowdown and said that interest rates are nearing a neutral rate, though a December rate hike remains on the table.
This coupled with some renewed selling pressure around European equity markets underpinned the Japanese Yen’s safe-haven status and further collaborated to the pair’s intraday slide back below the 113.00 handle.
The downside, however, is likely to remain limited as traders might be reluctant to place any aggressive bets amid relatively thin liquidity conditions on the back of the Thanksgiving holiday in the US.
Technical levels to watch
Any subsequent fall is likely to find support near the 112.75 region, below which the pair is likely to head back towards monthly lows, around the 112.30 region en-route 100-day SMA support near the 112.10 region.
On the flip side, the 113.20 region might continue to act as an immediate hurdle, which if cleared is likely to accelerate the positive momentum further towards the 113.65-70 supply zone.
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