USD/JPY rebounds modestly, heads for the third consecutive daily decline
|- USD/JPY recovers after the slide that followed Trump’s announcement.
- US President canceled a meeting with the North Korean leader and triggered risk aversion.
The USD/JPY pair dropped to 108.94 after US President announcement, reaching the lowest in two weeks. Then rebounded modestly, trimming losses. The recovery from the lows took place as US stocks bounced to the upside.
The yen is rising for the third day in a row against the US dollar. From the weekly high USD/JPY lost more than 200 pips. The bullish tone that prevailed since early April might have ended abruptly. So far, the greenback managed to hold on top of 109.00, a key technical level.
A retreat in US yields and risk aversion removed the bullish tone out of USD/JPY. The minutes from the latest Fed meeting, released yesterday, pointed to a June rate hike but failed to boost the dollar. The pair erased weekly gains and is now headed for the first weekly loss since early March.
USD/JPY Short-term Technical outlook
“The 4 hours chart shows that the current recovery is corrective after the pair touched its 200 SMA, but remains below the daily ascendant trend line coming from early April, finally broken early Asia, while the 100 SMA gains downward traction, now converging with the trend-line around 109.90”, said Valeria Bednarik, Chief Analyst at FXStreet.
According to her, the 4 hours chart shows technical indicators bouncing modestly from oversold readings, “but remain into the red and without enough strength to support additional gains ahead.”
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