USD/JPY drops to near 2-week lows, around mid-109.00s

The Japanese yen strengthened against its major counterparts on Thursday and dragged the USD/JPY pair to near two-week lows, around mid-109.00s.

The pair extended its retracement slide from multi-month tops – set last week – and witnessed some follow-through selling for the third consecutive session on Thursday amid reviving safe-haven demand.

Reviving safe-haven demand weighed on USD/JPY

Concerns of the corona-virus outbreak in China continued weighing on investors' sentiment. The anti-risk flows benefitted the Japanese yen perceived safe-haven status and exerted some pressure on the major.

The global flight to safety was further reinforced by a weaker tone surrounding the US Treasury bond yields, which further collaborated to the pair's ongoing slide to the lowest level since January 10.

This coupled with possibilities of some short-term trading stops being triggered below a previous resistance now turned support, around the 109.70 region, further aggravated the bearish pressure.

On the other hand, the US dollar consolidated its recent gains to monthly tops and did little to provide any respite to the bullish traders or stall the ongoing slide, suggesting further weakness for the major.

In absence of any major market-moving economic releases from the US, some follow-through weakness, possibility towards testing 50-day SMA near the 109.15 region, now looks a distinct possibility.

Technical levels to watch