USD/JPY: market players seeking for safety
|USD/JPY Current price: 108.31
- US Treasury yields under pressure, although within familiar levels.
- Poor US inflation revived concerns about economic growth and a possible Fed rate cut.
The USD/JPY pair fell to a fresh weekly low of 108.15 during Asian trading hours, under pressure amid renewed demand for safe-haven assets. Weaker-than-expected US inflation dented the market's sentiment, resulting in equities turning into the red throughout the different sessions, and government bond yields reaching fresh weekly lows, although action there is as limited as within currencies, all confined to tight ranges since Monday. Data coming from Japan was mixed, as the BSI Large Manufacturing Conditions Index fell to -10.4 in Q2, missing the market's expectations of 4.5 and worse than the previous -7.3, while May's Tertiary Industry Index surged by 0.8%, doubling the market's expectations. The US macroeconomic calendar will remain light, as the country will only release the usual weekly employment data, and Import and Export Prices for May.
From a technical perspective, the pair has made little progress, still hovering within Fibonacci levels, now around the 23.6% retracement of the latest daily decline at around 108.30. In the 4 hours chart, the pair was unable to surpass a directionless 20 SMA, while the larger ones accelerated their declines above it, with the 100 SMA nearing the 50% retracement of the mentioned daily slump. The Momentum indicator in the mentioned time frame heads lower below its 100 level, although lacking strength enough to anticipate further slides, while the RSI indicator hovers within negative levels, with even lesser directional strength.
Given the pair's failure to settle above the 38.2% retracement in the 108.60 region, the risk is skewed to the downside, with a break below 108.10 exposing the monthly low at 107.81. Chances will turn bullish once above 108.90, the 61.8% Fibonacci retracement.
Support levels: 108.10 107.80 107.45
Resistance levels: 108.60 108.90 109.30
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