- The USD weakens after the Fed opened doors for rate cuts by the end of 2019.
- Bearish traders further took cues from the ongoing slump in the US bond yields.
- BoJ’s decision to maintain status-quo fails to provide any respite for the bulls.
The USD selling pressure picked up the pace in the last hour, with the USD/JPY pair tumbling to fresh multi-month lows around mid-107.00s.
The pair remained under intense selling pressure on Thursday and added to the previous session’s losses, led by dovish FOMC monetary policy statement. The US central bank left interest rates unchanged but signalled that it was ready to lower interest rates amid increasing uncertainties and receding inflationary pressure.
The US Dollar weakened across the board in reaction to dovish commentary and continued losing ground through the early part of Thursday’s trading action. This coupled with the post-FOMC slump in the US Treasury bond yields to multi-year lows kept exerting some heavy downward pressure on the major.
The pair failed to gain any respite as bullish traders seemed rather unimpressed by the Bank of Japan (BoJ)’s decision to leave key policy tools unchanged and retained the short-term interest rate target at -0.1% while maintaining the 10-year Japanese government yield target around 0%.
Thursday’s strong follow-through weakness could further be attributed to some aggressive technical selling below the 108.00 handle, marking a near-term bearish breakthrough over a one-week-old trading range. Hence, a subsequent downfall, further towards challenging the 107.00 handle, now looks a distinct possibility.
Technical levels to watch