USD/JPY slides to multi-day lows, around 105.30 region amid notable USD supply
|- USD/JPY witnessed some follow-through selling for the third consecutive session on Friday.
- Sustained USD selling bias was seen as a key factor exerting downward pressure on the pair.
- A pickup in the US bond yields, rebound in the equity markets did little to lend any support.
The USD selling bias picked up pace during the European session and dragged to three-day lows, around the 105.30 region in the last hour.
The pair witnessed some follow-through selling for the third consecutive session on Friday and has now retreated around 100 pips from five-month tops, around the 106.20-25 region touched earlier this week. The downfall was exclusively sponsored by a broad-based US dollar weakness. Thursday's disappointing US Initial Jobless Claims raised doubts about the pace of the US economic recovery, which, in turn, was seen as a key factor weighing on the greenback.
Meanwhile, the pullback seemed rather unaffected by a solid rebound in the equity markets, which tends to undermine demand for the safe-haven Japanese yen. Bulls even shrugged off a goodish pickup in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government US bond has now moved back closer to one-year tops amid hopes that the US President Joe Biden's proposed $1.9 trillion stimulus package would support stronger economic recovery.
Hence, it will be prudent to wait for some strong follow-through selling before confirming that the recent rally might have run out of the steam. This, in turn, would set the stage for a further near-term depreciating move for the USD/JPY pair. The next relevant support on the downside is pegged near monthly swing lows, around the 104.40 region, which if broken should be seen as a fresh trigger for bearish traders.
Market participants now look forward to the US economic docket, highlighting the release of flash PMI prints (Manufacturing and Services) and Existing Home Sales data. This, along with the US bond yields, will influence the USD price dynamics. Traders might further take cues from the broader market risk sentiment to grab some short-term opportunities.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.