USD/JPY: risk-off returns, yen advances

USD/JPY Current price: 110.36

  • Trade-war concerns are back in fashion, backing a recovery in the JPY.
  • European equities in free-fall after the opening, government bond yields retreat.

The trade war is back in fashion after the Chinese Commerce Ministry stated that he has no choice in implementing new tariffs on US goods, as the unpredictable US behavior needs strong responses. The USD/JPY pair extended its gains overnight and hit 110.75, trimming its weekly losses, as the dollar remained strong on improved market mood, while the government bond yields extended their recoveries. The yield on the benchmark 10-year Treasury note traded as high as 2.95%, now down to 2.91%. The pair retreated from such high as equities are not enjoying that much love: Asian indexes are mixed ahead of the close, European ones mostly in red, and US futures nearing weekly lows. The pair retreated from its high and trades at 110.35, as high-yielding ease in benefit of safe-haven assets. The US macroeconomic calendar will offer this Thursday the usual weekly jobless claims figures, and the Philadelphia Fed Manufacturing Survey for June, expected at 29.0 from the previous 34.4.

The 4 hours chart for the pair maintains the positive stance despite the latest decline, as the price is above its 100 and 200 SMA, both within a tight range but with the shortest trying to advance beyond the larger one, also above the 110.15 Fibonacci support. The Momentum indicator maintains its bullish stance, although the RSI eases alongside with the price, holding so far within positive territory. A break below the mentioned support should exacerbate the decline, while the pair needs now to advance beyond 110.90 to extend its gains toward the 111.30/40 price zone.

Support levels: 110.15 109.85 109.55

Resistance levels: 110.90 111.35 111.70

View Live Chart for the USD/JPY

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