USD/JPY off multi-day tops, looks to test 110.00 ahead of Fedspeak
|- Japanese growth optimism in play as risk-on fades amid looming US-China trade risks.
- Eyes on risk sentiment, trade developments and Fed speak for fresh directives.
The USD/JPY pair is seen reversing most of the Asian gains and looks to test the 110 demand zone amid a slight turnaround in the risk sentiment, as the Asian equities finish near their lows and US equity futures turn lower.
The risk-on moods driven by the surprisingly positive Australian election outcome and Indian election exit polls appear to fade, as we head towards the European open, lifting the demand for the safe-haven Yen on looming concerns over the US-China trade spat while escalating tensions between the US and Iran also somewhat weigh on the risk appetite.
Moreover, the solid Japanese Q1 GDP report combined with upbeat remarks from the Japanese Chief Cabinet Secretary Suga on the economy also helps buoy the sentiment around the domestic currency.
Technically, the spot faced rejection at 110.31 – 38.2% Fib retracement of the sell-off from 112.40 to 109.02. “The short-term outlook would turn bullish if and when the pair closes above the key Fib resistance of 110.31. A repeated rejection at that hurdle could entice sellers, leading to a retest of the recent low of 109.02,” FXStreet’s Analyst Omkar Godbole notes.
Looking ahead, the prevailing risk sentiment will continue to influence the USD/JPY price action amid lack of significant US macro news and ahead of the Fed Chair Powell’s speech.
USD/JPY Technical Levels
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