USD/JPY Current price: 111.50
- A confident Fed wasn't enough to overshadow a new escalation in the trade war between the US and China.
- Nose-diving equities fuel demand for the safe-haven yen, not far from regaining its bearish tone.
The USD/JPY pair reached a two-week high of 112.14 but turned south early Europe, accelerating lower mid-US session, following the lead of Wall Street. The pair found support in strengthening US Treasury yields, as the yield of the benchmark 10-year note hit an intraday high of 3.02%, but risk aversion took over the financial world, on escalating tension between the US and China, which by the way, overshadowed a hawkish Fed's stance. The US central bank is still poised to raise rates gradually, with two more hikes expected for this year. News indicating that the White House will apply tariffs of 25% on $200B on Chinese goods, sent Wall Street lower and the safe-haven yen up. US Treasury yields retreated, but with the yield of the 10-year note anyway strong at around 2.99%. There are no relevant news scheduled in Japan for this Thursday. Technically, the pair remains depressed having met sellers earlier in the day at around the 61.8% retracement of its daily slump between 113.71 and 110.58 at around 112.20, now also below the 38.2% retracement of the same decline. In the 4 hours chart, the pair also broke below its 100 SMA, while technical indicators turned sharply lower from overbought readings, but remain within positive territory. The 23.6% retracement of the mentioned decline at 111.20 is now the immediate support, with a break below it exposing the 110.50 price zone.
Support levels: 111.20 110.85 110.50
Resistance levels: 111.75 112.20 112.60
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