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  • USD/JPY remained depressed for the fourth straight session on Thursday.
  • The risk-off mood benefitted the safe-haven JPY and exerted some pressure.
  • Resurgent USD demand helped limit deeper losses for the pair, at least for now.

The USD/JPY pair now seems to have entered a bearish consolidation phase and was seen oscillating in a range near one-month lows, around the 107.00 mark.

The pair added to this week’s heavy losses and remained depressed for the fourth consecutive session on Thursday, albeit a combination of diverging forces failed to provide any fresh directional impetus. The global risk sentiment took a hit in reaction to the Fed’s gloomy economic outlook. This, in turn, underpinned the Japanese yen’s safe-haven demand and kept exerting some pressure on the USD/JPY pair.

As was widely expected, the US central bank decided to leave the federal funds target rate at 0.00-0.25% at the end of a two-day meeting on Wednesday. The Fed also pledged to maintain the rate unchanged at near-zero levels through 2022 and updated investors on its outlook for the US economy. The Fed now expects GDP to contract -6.5% in 2020 and the unemployment rate to be at 9.3% by year-end.

The global flight to safety was reinforced by the ongoing slump in the US Treasury bond yields, which further inspired bearish traders and contributed to the USD/JPY pair’s slide to the lowest level since mid-May. The negative factors, to a larger extent, was offset by a goodish pickup in the US dollar demand. A broad-based USD strength helped limit any deeper losses for the pair, at least for now.

Moving ahead, market participants now look forward to the US macro data for some impetus. Thursday’s US economic docket features the release of Producer Price Index and Initial Weekly Jobless Claims. The data might influence the USD price dynamics, which along with the broader market risk sentiment might produce some meaningful trading opportunities later during the early North American session.

Technical levels to watch

 

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