USDJPY tumbled to nearly two-month lows below the 112.00 handle on Thursday, continuing to march south for a fifth day in a row. The dollar struggled to get a relief from the Fed’s unexpectedly ‘hawkish’ tone as the safe-haven demand has surged after the central bank meeting.
Such a behavior in the market shows that the risk trends set the tone for investors rather than the signals from FOMC that turned out to be rather optimistic as the Federal Reserve now expects two hikes instead of three next year, while markets have nearly prices out even a single hike, citing stress in global financial markets, heightened volatility, slowing global growth, a plunge in the oil market and the lingering risks from the US-China trade war, despite the recent progress in talks.
In the short term charts, the oversold conditions warrant some corrective recovery or at least a consolidation. The next major driver for the pair is the US NFP employment report due tomorrow. Should the numbers disappoint, the dollar could extend the decline.
A break below the 111.70 support will open the way to the 111.35 area. Once below this level, the greenback will target September lows marginally above the 111.00 threshold.