USD/JPY Analysis: risk aversion to keep underpinning the yen
|USD/JPY Current Price: 105.69
- Japanese growth beat expectations in the three months to June.
- Trade tensions keep fueling demand for safe-haven assets.
- USD/JPY long-term bearish case to see it losing the 105.00 threshold.
The Japanese Yen continued appreciating Friday on risk aversion, sending the USD/JPY pair to a fresh multi-month low of 105.26. The pair bounced to finish it with losses in the 105.60 region, as demand for safe-haven assets eased ahead of the close. However, speculative interest remained cautious as US President Trump said that he wasn't ready to do anything yet on a possible trade deal with China, suggesting that the next round of talks, scheduled for September in Washington, could be canceled. The yield on the benchmark 10-year Treasury note settled at 1.74% after hitting a daily low of 1.68%. In the data front, Japanese preliminary Q2 GDP resulted at 0.4%, better than the 0.1% anticipated, while Q1 reading was upwardly revised to 0.7%. The Japanese calendar will remain empty at the beginning of the week.
USD/JPY short-term technical outlook
The USD/JPY pair has room to extend its decline according to the daily chart, as technical indicators continue heading south within negative levels, as the pair develops below all of its moving averages and with the 20 DMA accelerating lower below the 100 and 200 SMA. In the shorter term and according to the 4 hours chart, the pair is also at risk of extending its decline, as, despite bouncing, technical indicators remain within negative levels. The 20 SMA caps the upside with a bearish slope at around 106.05, with a correction likely on an advance beyond this last.
Support levels: 105.25 104.95 104.60
Resistance levels: 105.80 106.05 106.40
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