“¢ Broad-based USD weakness exerts some fresh downward pressure.
“¢ A follow-through slide in the US bond yields adds to the selling bias.
“¢ The risk-on mood does little to lend any support ahead of US data/FOMC.
The USD/JPY pair failed to capitalize on its intraday positive move and dropped to fresh session lows, closer to near three-week lows set in the previous session.
Having touched a session high level of 111.55 – marking the very important 200-day SMA, the pair met with some fresh supply and has now drifted into the negative territory for the fourth session in the previous five.
The prevalent US Dollar selling bias, further aggravated by a follow-through slide in the US Treasury bond yields amid firming expectations that the Fed will maintain its cautious stance, turned out to be key factors exerting some downward pressure on the major.
Meanwhile, the prevalent risk-on mood, as depicted by a positive trading sentiment around equity markets and which tends to undermine demand the Japanese Yen’s relative safe-haven status did little to lend any support or provide any immediate respite to the bulls.
Traders now look forward to the US economic docket – featuring the release of ADP report on private sector employment and ISM manufacturing PMI, for some short-term impetus ahead of today’s key event risk – the latest FOMC monetary policy decision, due to be announced later today.
Technical levels to watch
A follow-through selling below the overnight swing lows support near the 111.25 region is likely to accelerate the slide further towards the 111.00 handle before the pair eventually slide to test the 110.85-80 horizontal support. On the flip side, the 111.55 region now seems to have emerged as an immediate hurdle, above which the pair is likely to aim towards surpassing the 111.85 supply zone and reclaim the 112.00 round figure mark.
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