USD/JPY plummets to 2-week lows, now eyeing 108.00 handle

• The USD continues to be weighed down by a less hawkish FOMC statement.
• Reviving safe-haven demand led to some follow-through selling on Thursday.
• Not so optimism comments from China exerted some additional pressure.

The USD/JPY pair broke down of its late Asian/early European session consolidation phase and tumbled to over two-week lows, around the 108.25 region in the last hour.
 
The pair extended the overnight post-FOMC pullback from near three-month tops, levels beyond the 109.00 round-figure mark, and witnessed some strong follow-through selling on Thursday amid reviving safe-haven demand. Thursday's disappointing Chinese PMI prints fueled concerns about slowing global growth and weighed on investors' sentiment.

Weighed down by fresh trade jitters

The global risk sentiment deteriorated further in the wake of a report, suggesting that China is casting doubts over a long-term trade deal with the US. Fresh US-China trade jitters provided a strong boost to the Japanese Yen's safe-haven status and led to the pair's sudden fall of around 40 pips over the past hour or so.
 
Meanwhile, the global flight to safety triggered a fresh leg of a freefall in the US Treasury bond yields. Against the backdrop of Wednesday's less hawkish than expected FOMC statement, falling US bond yields kept exerting some downward pressure on the US Dollar and further collaborated to the pair's sharp intraday slide.
 
It will now be interesting to see if the pair is able to attract any buying interest at lower levels as market participants look forward to the US economic docket – featuring the release of core PCE price index, personal income/spending data and initial weekly jobless claims – for some immediate respite for the USD bulls.

Technical levels to watch