USD/JPY dumps below 105 as sentiment worsens

Thursday saw some steep selling in the equity markets, which led to a broad de-risking and sent the USD/JPY pair below the strong support zone of 105.00.

At the time of writing, the pair was trading 0.2% weaker and was seen hovering at around 104.70.

Yesterday's FOMC was not as dovish as hoped for, and investors were disappointed. Thus equities slid. Today's US data were also a bit of a let down as most of the numbers from the macro calendar came below analysts' expectations.

Firstly, US initial jobless claims improved to 860,000 from 893,000, but analysts had expected 850,000 new claims. Continuing claims ticked lower to 12.62 million from 13.54 million previously.

Moreover, building permits dropped 0.9% month-on-month from 1.483 million to 1.47 million, and housing starts suffered a 5% decline monthly, down to 1.416 million.

As long as the pair remains below the 105.10 support, the short-term outlook seems negative, targeting July's lows of 104.15.

Alternatively, if the greenback strengthens back above the 105 threshold, we could see a rally toward 106, where the previous consolidation range is seen.