USD/JPY: Heavy downside pressure

USD/JPY has intensified the leg lower on Thursday and it has now breached the key support at 106.00. Persistent risk aversion and lower yields boost the demand for the yen, Pablo Piovano from FXStreet informs.

Key quotes

“The resumption of the risk aversion in combination with declining US yields is favouring the demand for the safe-haven JPY, always against the broader backdrop of unremitting concerns surrounding the COVID-19.”

“The bearish scenario is set to prevail at least in the short-term horizon, as the greenback could still suffer another interest rate cut by the Fed at the March 17-18 meeting.”

“Occasional rallies in USD/JPY are still seen as selling opportunities and are expected to lose momentum in the 107.60 region  ahead of the 200-day SMA at 108.34.”

“Further weakness is therefore expected to materialize when below this key barrier. Looking south, there are no support levels of significance until 105.05.”