USD/JPY nursing losses near 15-month lows, below 106.00 handle

   •  USD selling remains unabated.
   •  Risk-on mood does little to support.
   •  Set for the lowest close since Nov. 2016.

The USD/JPY pair remained under some intense selling pressure for the fifth consecutive session and broke below the 106.00 handle for the first time since Nov. 2016.

The prevalent strong bearish sentiment surrounding the US Dollar, which has failed to find any buyers despite stronger incoming economic data, has been one of the key factors weighing heavily on the major. 

This combined with the recent rout across global equity markets, pointing to fragile risk sentiment continued benefitting the Japanese Yen's safe-haven appeal and further collaborated to the pair's sharp downfall to 15-month lows. 

Meanwhile, comments by Japanese Finance Minister Aso, on no Yen intervention needed, combined with news that Haruhiko Kuroda has been reappointed as BOJ Chief for another term did little to provide any immediate respite. 

The selling pressure now seems to have abated a bit, at least for the time being, amid near-term oversold conditions, with bulls now trying to defend monthly 200-SMA support near the 105.70 region. 

Traders now look forward to the US housing market data, which along with the release of Prelim UoM Consumer Sentiment might provide some short-term trading impetus later during the early NA session.

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: “On a larger scheme of things, the pair looks set to test 103.00-102.00. A minor corrective rally could be seen but is likely to be capped around the downward sloping 1-hour 50-MA currently positioned at 106.69. The momentum studies on the daily chart are biased bearish - the 5-day MA and 10-day MA are trending lower. So upticks above 107.00 are likely to be short-lived. Only a weekly close above 108.00 would signal bearish invalidation.”