USD/JPY flirting with lows, around 113.25 area amid notable USD supply
• The ongoing USD retracement failed to assist the pair to build on an intraday uptick.
• Cautious mood further underpins JPY’s safe-haven demand and exerting pressure.
After an initial uptick to mid-113.00s, the USD/JPY pair met with some fresh supply and dropped to fresh session lows in the last hour.
The pair extended last week's retracement slide from 1-1/2 week tops, with a combination of negative forces exerting some downward pressure for the second consecutive session on Monday. The ongoing US Dollar corrective fall from 1-1/2 year tops, amid uncertainty over the Fed's monetary policy outlook for 2019, kept a lid on the pair's attempted intraday rebound.
This coupled with concerns over the outlook for global growth, especially after Friday's dismal macro data from China and Europe, underpinned the Japanese Yen's safe-haven demand and further collaborated to the pair's weaker tone at the start of a new trading week.
It, however, remains to be seen if the current pull-back finds some buying interest at lower levels or the marks the end of the recent up-move from the very important 100-day SMA support amid absent market moving economic releases.
Heading into this week's key event risk - the highly anticipated FOMC monetary policy update, traders are likely to refrain from placing any aggressive bets and might help limit any meaningful downside, at least for the time being.
Yohay Elam, FXStreet's own Analyst explains: “The most significant event of the week is Wednesday's all-important Fed decision. A rate hike is fully priced in, but expectations about the guidance for 2019 remain wide open. The latest forecast on rates by the Fed showed three increases next year. Recent dovish comments and unimpressive economic data caused some second thoughts about only one hike or even none at all.”
“The Relative Strength Index on the four-hour chart is balanced at around 50 and Momentum is not showing any trend. The pair is hovering slightly above the 50 and 200 Simple Moving Averages, but this is unlikely indicative of any significant movement,” he added further.