USD/JPY reverses and tumbles more than 150 pips on Thursday, more losses ahead?
- US dollar keeps falling across the board, unable to find support.
- Yen up versus greenback but limited against other rivals by risk appetite.
The USD/JPY pair dramatic rally from near 101.00 could have come to an end on Thursday. The pair lost almost 20 pips, having the worst day in two weeks. The decline took place after the rally found resistance near February highs and amid a sharp decline of the greenback.
It was the third decline in a row for the US Dollar Index, but the first time it also fell versus the yen. Not even another day of substantial gains in Wall Street offered support to USD/JPY. The pair bottomed at 109.17 during the American session. It then rebounded modestly to the 109.50 area, holding firm to most of its losses. The S&P 500 rose 6%, extending the positive streak even after US initial jobless claims report showed an increase of 3.3m.
According to Valeria Bednarik, Chief Analysts at FXStreet, the 4-hour chart shows the pair has broken below its 20 simple moving average (SMA), “which slowly grinds lower at around 110.75, while approaching a flat 200 SMA, this last, providing support at around 108.60.”
Technical indicators in the mentioned time-frame head firmly lower within negative levels, signalling additional declines ahead. The pair has room now to extend its decline toward the 108.50 area, where it has relevant intraday highs and lows”, adds Bednarik.