USD/JPY hangs closer to three-week lows, below 112.00 handle

The USD/JPY pair continued with its struggled to gain any fresh traction and remained capped below the 112.00 handle.

With markets looking past dovish BOJ monetary policy decision, a fresh wave of greenback selling pressure has been one of the key factors weighing on the major on the last trading day of the week. In fact, the key US Dollar Index has now slipped below the 94.00 handle and dragged the pair to session lows near the 111.70 region.

   •  USD: Burdened by politics and economics - Westpac

Meanwhile, the prevalent risk-off environment, as depicted by weaker trading sentiment around global equity markets was also seen lending support to the Japanese Yen's safe-haven appeal and further collaborated to the pair's fall back closer to three-week lows touched in the previous session.

From a technical perspective, the pair has been finding some buying interest near mid-111.00s and hence, it would be prudent to wait for a sustained break below the mentioned support before positioning for any further near-term depreciating move.

Today's US economic docket lacks any major market moving economic releases and hence, broader market risk sentiment and the USD price dynamics would remain key determinants of the pair's movement through Friday's trading session.

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: "Persistent demand below 200-DMA suggests scope for re-test of the previous day’s high of 112.42. The gains could be extended to 10-DMA level of 112.75, although the rally may not be sustained… given the daily RSI is bearish and the US-Japan 10-yr yield has re-entered falling channel as seen on the chart below. Only an end of the day close below 111.78 would signal continuation of the sell-off from the recent high of 114.49 levels. "