USD/JPY breaks below 116.00 handle to 3-week low

The USD/JPY pair remained under intense selling pressure on Thursday and broke below 116.00 handle to a three-week low.

Currently trading around 115.90-95 band, off around 30-pips from session low, the pair amplified overnight reversal move, from levels beyond 118.00 handle, after minutes from the Federal Reserve's latest monetary policy meeting showed number of risks, which might change the course of the Fed’s currently expected monetary policy path. 

The minutes also revealed uncertainty surrounding the economic effect of President-elect Donald Trump's fiscal measures and central bank's concerns about the disinflationary impact of the strong US dollar, triggering a drop in the U.S. treasury bond yields and drove the US dollar lower across the board.

Adding to this, a slightly weaker sentiment surrounding equity markets was also seen benefitting the Japanese Yen's safe-haven appeal and collaborating to the pair's downslide on Thursday. 

Moving ahead, USD price dynamics will remain a key determinant of the pair's trajectory on Thursday as focus now shifts to today's key US macro releases - ADP report on private sector employment and ISM non-manufacturing PMI print ahead of Friday’s NFP report, which would be a key determinant of the pair's next leg of directional move. 

Technical levels to watch

Immediate support is pegged at 115.45 level below which the pair seems more likely to break below 115.00 psychological mark and head towards testing its next support near 114.75 horizontal zone. On the upside, recovery back above 116.00 handle might now confront resistance near 116.50 level, which if cleared might trigger a short-covering rally beyond 117.00 handle, towards its next major hurdle near 117.40-45 region (session peak).