USD/JPY bounces off weekly lows, looking to retake 106.00 handle
| • FOMC-led USD weakness extends through Asian session.
• Global trade was concerns supporting JPY’s safe-haven appeal.
• Break below 105.60-50 area to open room for further downside.
The USD/JPY pair extended its post-FOMC retracement slide and dropped to fresh weekly lows during the Asian session on Thursday.
Bulls were clearly unhappy by the fact that the Fed, in its latest monetary policy update on Wednesday, did not signal a faster monetary policy tightening cycle and stuck to its previous guidance of total three rate hikes in 2018. The disappointment prompted some aggressive US Dollar selling, with the pair reversing from the 106.60-65 supply zone, or one-week tops.
Meanwhile, growing concerns over an upcoming announcement on tariffs from the US President Donald Trump dented investors' confidence and provided an additional boost to the Japanese Yen's safe-haven appeal. The pair fell to fresh weekly lows but once again managed to find some support near the 105.60-55 region.
Currently trading around 105.85-90 band, traders now look forward to the usual weekly initial jobless claims data from the US for some short-term impetus. Meanwhile, the broader market risk sentiment might continue to act as an exclusive driver of the pair's momentum on Thursday.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet writes: “A downside break of the symmetrical triangle would open doors for a drop to 105.00. A violation there would allow Yen bulls to push the spot all the way down to 101.19 - starting point of the trump rally.”
“Meanwhile, on the higher side, a convincing break above the descending 30-day MA (106.67) would add credence to the upside break of the descending trendline and indicate the spot has bottomed out at 105.25. However, only a close above 107.29 (March 13 high) would signal a bearish-to-bullish trend change”, he adds further.
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