USD/JPY plummets to fresh lows around 110.65

The JPY is gathering strength against the greenback late US afternoon, sending USD/JPY to fresh daily lows at 110.65. At the moment, the pair is down 0.2% at 110.70.

However, this move is not backed by a fundamental catalyst and appears to be a technical drop, thus making it difficult for the pair to gather a bearish momentum. On the other hand, the US Dollar Index remains below 101, denying an upward correction. 

Regarding today's statements by Fed Chair Janet Yellen, Kathy Lien, Managing Director at BK Asset Management, notes that Yellen expressed confidence in the housing market, domestic and global economy.  However, she also said productivity growth has been very disappointing, and GDP growth has been lackluster given high job growth. With that in mind, she believes that a gradual pace of hikes is appropriate and the Fed wants to avoid being behind the curve.

Technical outlook

The pair could face the first technical resistance at 111.25 (20-DMA) followed by 112.20 (Mar. 31 high) and 112.70 (50-DMA). On the downside, supports could be found at 110.10 (Apr. 7 low), 109 (psychological level) and 108.55 (Nov. 17 low).

• Leveraged Funds’ net short JPY positioning continued to decline – Nomura