- USD / JPY is under intense selling pressure on Wednesday and falls below the 105.00 level.
- A sharp turn in the equity markets benefits the Japanese yen and puts strong pressure on the pair.
- The selling tone around the USD does little to offer support or stop the sharp intraday decline.
The pair USD/JPY has seen strong sales during the European session on Wednesday and has fallen to new monthly lows, below the key psychological level of 105.00 in the last hour. At time of writing, the pair remains close to daily lows and bearish pressure intact around 104.90.
A radical change in sentiment of global risk appetite It has forced investors to take refuge in traditional safe-haven currencies such as the Japanese yen. This adds to the bearish sentiment around the US dollar., which, in turn, has been seen as a key factor behind the strong intraday fall of the USD / JPY pair to the lowest level since September 23.
The latest optimism about additional US fiscal stimulus measures has faded rather quickly and has been evident by a new downward movement in stock markets. Hopes for a pre-election stimulus package were revived after President Donald Trump said he was willing to accept a larger aid bill despite opposition from his own Republican Party. .
Trump’s comments raised prospects for more government loans and prompted a sell-off in US bonds. The lack of demand for public debt has been considered another factor that puts additional downward pressure on the dollar.
The bearish momentum has executed some short-term stop orders located near the 105.00 level, setting the stage for a new intraday bearish move. Therefore, some continuing weakness towards the intermediate support at 104.45, en route to the September monthly lows near the 104.00 level, now looks like a possibility.
There is no major economic data release from the US on Wednesday. Therefore, broader market risk sentiment, along with USD price dynamics and developments around US fiscal stimulus, will play a key role in USD / JPY price action. .
Credits: Forex Street
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