- USD / JPY is witnessing some continuation selling for the third day in a row on Thursday.
- The downward movement is due exclusively to sustained selling around the USD.
- The bullish market sentiment could help limit the slide ahead of the BoJ meeting on Friday.
The pair USD/JPY continues to lose ground during Thursday’s European session and has fallen to new multi-month lows near the 103.00 level.
The pair has extended this week’s downtrend and witnessed some sales for the third day in a row. The current decline is due exclusively to the prevailing bearish sentiment around the US dollar, which has fallen to new lows in two and a half years amid prospects for additional fiscal stimulus in the US.
In fact, Republicans and Democrats in the United States Congress are Nearing Approval of a $ 908 Billion COVID-19 Relief Package. They are also working to pass a 1.4 trillion spending bill by Friday to avoid a government shutdown. This, coupled with a pessimistic statement from the FOMC, it has put additional pressure on the dollar.
At the final meeting of the year, the Fed showed its willingness to do more if needed and said it will continue to support the economy through massive monetary stimulus. The US central bank has also promised to keep interest rates near zero for years to come amid concerns about the coronavirus.
Meanwhile, prevailing upbeat sentiment in the market has done little to boost selling around the Japanese yen, safe haven, although it could help limit any further decline in the USD / JPY pair. Investors could also refrain from opening aggressive positions and prefer to wait on the sidelines before the last meeting of the Bank of Japan (BoJ) on Friday.
With that said, sustained weakness below the 103.00 level could spark some technical selling and make the USD / JPY vulnerable to continue its downward movement. However, the bias still looks tilted in favor of the bears and the pair is more likely to slide to test the March daily closing lows around the 102.35-30 area.
USD / JPY technical levels
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