USD/JPY: risk aversion fuels yen's demand

USD/JPY Current price:  108.08

  • Chinese trade figures put the focus back in slowing global economic growth.
  • Japanese markets closed on a holiday, US calendar scarce amid government partial shutdown.

Sentiment deteriorated at the start of the week, following the release of softer-than-expected Chinese trade data which revived concerns of an economic slowdown. The trade surplus was up to $57.06B in December largely surpassing the previous one and the market's expectations, although as a result of a sharp decrease in imports, which were down 7.6%. Exports also decline although to a lesser extent, by 4.4%. When watching the US-China situation, the Chinese surplus grew 17% YoY to reach $323.32B in 2018, the highest on record, as exports rose 11.3% while imports were up 0.7% in the same period. Trump's efforts and tariffs are falling well short of granting the US the victory in the trade war.

Risk aversion took over, with Asian and European stocks' markets in the red and the yen appreciating. The USD/JPY pair nears the 108.00 figure, with a holiday in Japan limiting intraday volatility at the beginning of the day.

The USD/JPY pair trades a handful of pips below the 50% retracement of its December/January slide, still unable to detach from the level at around 108.30, with a neutral-to-bearish stance in its 4 hours chart, given that the price remains well below firmly bearish 100 and 200 SMA, as technical indicators lack directional strength, the Momentum around its 100 level but the RSI at 41, leaning the scale to the downside. The 38.2% retracement of the mentioned decline comes at 107.55, with the bearish potential increasing on a break below it.

Support levels: 107.90 107.55 107.20      

Resistance levels: 108.30 108.65 109.05

View Live Chart for the USD/JPY

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