- 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
|Today last price||105.36|
|Today Daily Change||-0.30|
|Today Daily Change %||-0.28|
|Today daily open||105.66|
|Previous Daily High||105.92|
|Previous Daily Low||105.6|
|Previous Weekly High||105.67|
|Previous Weekly Low||104.41|
|Previous Monthly High||104.94|
|Previous Monthly Low||102.59|
|Daily Fibonacci 38.2%||105.72|
|Daily Fibonacci 61.8%||105.8|
|Daily Pivot Point S1||105.53|
|Daily Pivot Point S2||105.4|
|Daily Pivot Point S3||105.2|
|Daily Pivot Point R1||105.85|
|Daily Pivot Point R2||106.05|
|Daily Pivot Point R3||106.18|
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