USD/JPY came under intense selling pressure on Thursday
The USD/JPY pair added to the previous day's modest losses and witnessed heavy follow-through selling on Thursday. This marked the second successive day of a negative move - also the third in the previous four - and dragged spot prices to over a two-week low, around mid-127.00s during the early North American session. The prevalent risk-off mood boosted the traditional safe-haven Japanese yen and exerted heavy downward pressure on the USD/JPY pair. Bearish traders further took cues from an extension of the sharp pullback in the US Treasury bond yields, which forced the US dollar to trim a part of its intraday gains to a two-decade high.
Given the formation of a double-top pattern near the 131.35 region, the overnight breakdown through an ascending trend-line extending from late March was seen as a fresh trigger for bearish traders. A subsequent fall and acceptance below the 129.00 round figure prompted aggressive technical selling and contributed to the steep decline.
From current levels, sustained weakness below the 128.00 mark will set the stage for additional losses and drag the USD/JPY pair further towards testing the 127.55-127.50 intermediate support. The downward trajectory could further get extended towards the next relevant support near the 127.00-126.90 region touched on April 27. On the flip side, attempted recovery might now confront stiff resistance near the 128.60 area. Any further move up is likely to meet with a fresh supply and remain capped near the 129.00 level. That said, some follow-through buying could trigger a short-covering move and lift the USD/JPY pair back towards the 130.00 psychological mark.
From current levels, sustained weakness below the 128.00 mark will set the stage for additional losses and drag the USD/JPY pair further towards testing the 127.55-127.50 intermediate support. The downward trajectory could further get extended towards the next relevant support near the 127.00-126.90 region touched on April 27. On the flip side, attempted recovery might now confront stiff resistance near the 128.60 area. Any further move up is likely to meet with a fresh supply and remain capped near the 129.00 level. That said, some follow-through buying could trigger a short-covering move and lift the USD/JPY pair back towards the 130.00 psychological mark.