• A modest USD pullback exerts some fresh downward pressure in the last hour.
• Technical selling below 111.80 further aggravates the intraday bearish pressure.
The USD/JPY pair finally broke down of its European session consolidation phase and tumbled to two-week lows, around mid-111.00s in the last hour.
After spending the majority of Thursday's trading session in the negative territory, the pair met with some fresh supply and the latest leg of a sudden drop could be primarily attributed to a modest US Dollar pullback. Despite upbeat US durable goods orders data, the greenback struggled to capitalize on its early move to the highest level since May 2017 and turned out to be one of the key factors exerting some downward pressure.
Adding to this, the prevalent cautious mood around equity markets underpinned the Japanese Yen's relative safe-haven status, with possibilities of some intraday trading stops being triggered below the 111.85-80 region further aggravating the intraday bearish pressure and dragging the pair to its lowest level since April 11.
It would now be interesting to see if the pair is able to find any buying interest at lower levels or the current pullback marks the start of a near-term corrective slide from YTD tops set in the previous session.
Technical outlook
Valeria Bednarik, FXStreet's own American Chief Analyst writes, “the Momentum still stuck in neutral territory and the RSI gaining downward traction at around 46, skewing the risk to the downside. The pair is also nearing its recent lows in the 111.60 region, with a break below the level opening doors for another move south toward the 111.00 price zone.”
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