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USD/JPY flirting with session lows, around 108.80 region

  • USD/JPY remains under some selling pressure for the second straight day.
  • A fresh wave of risk-aversion trade benefitted the JPY’s safe-haven status.
  • Investors look forward to the US Q4 GDP print for some trading impetus.

The USD/JPY pair on Thursday weakened farther below the 109.00 round-figure mark and has now moved well within the striking distance of multi-week lows.

The pair extended the previous session's retracement slide from weekly tops and witnessed some follow-through selling for the second consecutive session on Thursday. With the death toll in China rising to 132, concerns over the economic impact of the deadly coronavirus led to a fresh wave of the global risk-aversion trade.

USD/JPY weighed down by reviving safe-haven demand

The anti-risk flows, as depicted by a sea of red across equity markets, benefitted the Japanese yen's safe-haven status and turned out to be one of the key factors exerting some pressure on the major. The risk-off mood-led slump in the US Treasury bond yields further collaborated to the pair's weaker tone through the early European session.

Meanwhile, the US dollar held steady and was being supported by signs of a strengthening economy. Meanwhile, the Fed Chair Jerome Powell showed dissatisfaction over the inflation running below the 2% and fueled market expectations for at least one rate cut this year. This eventually capped the USD and did little to ease the bearish pressure.

Currently hovering around the 108.85 region, a subsequent slide below 100-day SMA might be seen as a key trigger for bearish traders and pave the way for a further near-term depreciating move. Market participants now look forward to the release of Advance US Q4 GDP print, due later this Thursday, for some immediate respite for bulls.

Technical levels to watch

 

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