USD/JPY slammed back below 110.0 handle, drops to 109.65

The USD/JPY pair reversed from its overnight rally to 110.45 and fell sharply to 109.42 during Asian trading session on Thursday before recovery a bit to currently trade near 109.65.

The pair dropped sharply despite of overnight risk-on rally in US equities and a mixed Asian equity markets on Thursday. The pair weakened back below 110.00 handle on comments from Masatsugu Asakawa, vice-minister of finance for international affairs that Yen intervention will stay in toolbox, negating the possibilities of an immediate intervention.

From the US, traders on Thursday will confront the release of US durable goods orders, weekly jobless claims and pending home sales data along with couple of Fed speeches, which would set the tone for the pair's near-term direction.

From technical perspective, the pair once again failed to sustain its strength above 50-day SMA and hence a follow through selling pressure below this week's daily closing lows support near 109.25-20 would open room for further near-term depreciation for the pair.

Technical levels to watch

Below 109.25-20 support and a subsequent break through 109.00 handle is likely to accelerate the fall further towards its 108.50-40 strong horizontal support. Further, a decisive break below 108.50-40 support would increase the pair's vulnerability to continue with its downward trajectory towards retesting 107.25-107.00 support region in the near-term.

Meanwhile on the upside, 50-day SMA, currently near 109.80-85 region, remains key resistance to conquer, above which the pair is likely to make a fresh attempt to extend its up-move beyond 110.00 handle to test 3-weekly highs resistance near 110.55-60 area. A decisive strength above this key resistance should now open room for further near-term appreciating move for the pair, towards its next major resistance near 111.25-30 area.