USD / JPY falls to new one-month lows, approaching 104.50

• USD / JPY witnessed strong selling on Wednesday amid widespread USD weakness.
• Technical selling below 105.00 further exacerbated the intraday bearish pressure.
• September’s monthly swing lows, around 104.00, is the next relevant target for the bears.

The pair USD/JPY It continued to lose ground during the early North American session and fell to fresh one-month lows around the 104.60-55 region in the last hour.

Following the modest overnight pullback from the 105.75 region, the pair came under intense selling pressure on Wednesday and was being pressured by bearish sentiment surrounding the US dollar. Positive developments surrounding the next round of US fiscal stimulus raised the prospects for more government loans and led to a sell-off in US bonds. The lack of demand for public debt was seen as one of the key factors that continued to put downward pressure on the dollar.

It’s worth recalling that hopes for a pre-election stimulus package were revived after White House Chief of Staff Mark Meadows said Tuesday that House Speaker Nancy Pelosi and Secretary of the Treasury, Steven Mnuchin, have come a long way in the stimulus talks. Furthermore, US President Donald Trump said he was willing to accept a large aid bill, despite opposition from his own Republican party in the Senate. Investors, however, were skeptical as negotiations will continue on Wednesday.

Aside from this, the prevailing cautious mood, as shown by a flat opening in the US equity markets, extended some additional support to the Japanese yen as a safe haven and further contributed to the sharp decline in the USD pair. / JPY. The bearish trajectory took some short-term trading stops located near the key psychological level of 105.00. A subsequent fall below the previous monthly swing lows compounded the intraday bearish pressure and dragged the USD / JPY to its lowest level since September 22.

Now it will be interesting to see if the pair is able to find any support at lower levels or continues the bearish slide amid extreme oversold conditions on the intraday charts. However, the stage seems set for further weakness, possibly back towards challenging the support of the September monthly lows near 104.00.