USD/JPY plummets to over two-month lows, below 111.00 handle

   •  Dovish FOMC minutes-led USD selling remains unabated.
   •  JPY gets an additional boost from Risk aversion trade.
   •  Now seems vulnerable to extend the bearish slide. 

The selling bias around the greenback remains unabated, now dragging the USD/JPY pair farther below the 111.00 handle for the first time since mid-September.

The US Dollar extended its recent downslide led by dovish FOMC meeting minutes, which raised concerns over stubbornly low inflationary pressure and dampened prospects for aggressive Fed rate hike action post-December, and dropped to two-month lows. 

Adding to this, the prevalent cautious sentiment around equity markets was seen lending support to the Japanese Yen's safe-haven appeal and further collaborated to the pair's sharp downfall during the early NA session on Monday.

Today's sharp reversal from a previous support now turned immediate resistance, and a subsequent drop to fresh lows confirmed last week's bearish break below the very important 200-day SMA. Hence, a follow-through weakness led by some fresh technical selling and amid uncertainty surrounding the US tax reform bill now seems a distinct possibility.

Next on tap would be the release of new home sales data, which followed by Fedspeaks - New York Fed President William Dudley and Minneapolis Fed President Neel Kashkari would now be looked upon for some immediate respite for the USD bulls.

Technical outlook

Valeria Bednarik, American Chief Analyst at FXStreet writes, "according to technical readings in the 4 hours chart, as the price continues developing far below bearish 100 and 200 SMAs, as technical indicators turned lower, the Momentum entering bearish territory and the RSI currently at 31. The pair has an immediate support at 110.80, with a break below it opening doors for a steeper slide ahead toward the 110.00 level."