USD/JPY remains near daily lows despite USD recovery
- Greenback has worst day since mid-November against yen.
- Japanese currency outperforms for second day in-a-row.
The USD/JPY pair was about to end the day with a decline of more than a hundred pips. The negative tone intensified on Wednesday after the pair broke below the 112.00 support.
On Tuesday, after the Bank of Japan reduced its long-term bond purchases the yen rose across the board. The positive tone prevailed during the Asian session. Then came a report from Bloomberg indicating that Chinese officials were planning to halt purchases of US government bonds. It triggered a sell-off of the US dollar and boosted further the demand for the yen. Not even soaring US yields stopped the slide of USD/JPY.
The pair bottomed at 111.25, the lowest since November 28. Afterward it consolidated near 111.50, more than a hundred pips below Tuesday’s close. It was the worst day for the pair since mid-November.
Technical outlook
“Heading into the Asian opening some 20 pips above the daily low, the 4 hours chart shows that the pair is still biased lower, as it stands well below its 100 and 200 SMAs, both lacking directional strength, while technical indicators hold within oversold territory, losing their downward momentum but far from supporting additional gains ahead”, said Valeria Bednarik, Chief Analyst at FXStreet.
According to her, the pair can gain some traction upwards above 111.60, while selling interest will probably resurge on an approach to the 112.00 figure.