USD/JPY extends losses toward 110 on broad-based USD weakness
|- US Dollar Index plummets to a fresh 3-day low below 96.30.
- Risk aversion helps the safe JPY find demand on Friday.
The USD/JPY extended its losses in the early NA session and touched a daily low at 110.32 as the greenback fails to shake off the bearish pressure. At the moment, the pair is down 50 pips, or 0.45%, on the day at 110.40.
A sharp fall witnessed in the USD/CAD pair after the monthly inflation report seems to be the primary reason behind the current USD weakness. The annual CPI in Canada jumped to 3% in July from 2.5% in June to force the USD/CAD pair to erase more than 100 pips in a matter of minutes. As of writing, the DXY is down 0.3% on a daily basis at 96.30.
On the other hand, news of the Turkish Supreme Court rejecting pastor Brunson appeal for a release keeps investors on edge as the U.S. is expected to retaliate by introducing new sanctions against Turkey. Furthermore, losses witnessed in the major European equity indexes are likely to weigh on the Wall Street and force the U.S. stocks to start the day in the negative territory. The weakening market sentiment could help the JPY gather strength against its rivals as a safe-haven.
The economic docket in the U.S. will feature the UoM Consumer Sentiment Index, which is expected to improve slightly to 98 from 97.9 in the previous reading.
Technical outlook
On the downside, the pair could face the first support at 110 (psychological level) ahead of 109.30 (200-DMA) and 108.70 (Jun. 1 low). Resistances align at 110.45 (100-DMA), 111.05 (20-DMA/50-DMA) and 111.45 (Aug. 8 low).
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