USD/JPY drops to fresh monthly lows near mid-111.00s

The greenback selling bias remains unabated, with the USD/JPY pair hitting fresh multi-week lows near 111.45 region

The pair extended its reversal from near 4-month highs touched last week and traded with a negative bias for the eighth day in the previous ten. The ongoing US Dollar slump to 13-month lows, below the 94.00 handle has been one of the key factors weighing on the major.

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This coupled with the prevalent risk-off environment, further reinforced by sliding US Treasury bond yields was also seen benefitting the Japanese Yen's safe-haven appeal and collaborated to the pair's fall to fresh monthly lows. 

Meanwhile, the market seems to have digested yesterday's dovish BOJ decision to keep its massive stimulus program in place, amid stubbornly weak inflation and postponed the timeframe to achieve its ambitious 2.0% inflation target. 

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The pair has now decisively broken below important moving averages (50,100 and 200-day SMAs) confluence support and remains on track to post second consecutive week of losses, in absence of any major market moving economic releases from the US.

Technical levels to watch

From current levels, 111.25 area is likely to protect the immediate downside, below which the fall could further get extended even below the 111.00 handle towards its next major support near 111.75-80 zone. 

On the upside, any recovery attempts might now confront fresh supply near the 112.00 handle, which if cleared might trigger a short-covering rally towards 112.35-40 horizontal resistance.