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USD/JPY remains depressed near 3-week lows, below 109.00 mark

  • USD/JPY remains heavily offered on Friday and tumbles to over three-week lows.
  • A selloff in equities, tumbling US bond yields continues to fuel the bearish trend.
  • Fed rate cut speculations weighed on the USD and did little to ease the pressure.

The buying interest around the safe-haven Japanese yen remained unabated on Friday and dragged the USD/JPY pair to over three-week lows, below the 109.00 mark.

The pair extended its recent sharp retracement slide from multi-week tops and witnessed some heavy selling for the second consecutive session on Friday – also marking its fifth day of a negative move in the previous six.

USD/JPY extends the coronavirus-led downfall

A continuous rise in the new coronavirus cases outside China, which remains a key theme in the markets, continued fueling fears of its impact on the world economy and led to a brutal selloff in equity markets across the globe.

A week-long global market rout provided a strong boost to traditional safe-haven currencies, like the Japanese yen, and turned out to be one of the key factors that kept exerting some heavy pressure on the major.

The global flight to safety further forced the US Treasury bond yields to collapse to fresh record lows on Friday, which kept the US dollar bulls on the defensive and did little to stall the pair's ongoing steep decline.

The greenback was further pressurized by the fact that the market remains convinced that the Fed would need to cut interest rates in order to offset the negative impact of the deadly virus on the domestic economy.

This coupled with possibilities of some short-term trading stops being triggered below strong horizontal support near the 109.60 further contributed towards aggravating the bearish pressure surrounding the major.

Meanwhile, extremely oversold conditions on hourly charts helped ease the bearish pressure, at least for the time being, and assist the pair to rebound around 20 pips from Asian session swing lows, near the 108.80 area.

Friday's US economic docket – featuring the release of Personal Income/Spending data, Core PCE Price Index and Chicago PMI – might now be looked for some trading impetus, though is unlikely to be a game-changer.

Technical levels to watch

 

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