USD/JPY extends slide toward 108 on flight to safety

The USD/JPY pair came under strong bearish pressure during the European trading hours on Thursday as the resurfacing worries over the United States and China failing to reach a long-term trade deal weighed on the market sentiment and boosted the demand for safe-haven assets such as the JPY.

Risk-off flows dominate the markets on Thursday

With the market sentiment remaining sour in the second half of the day, the pair slumped to its lowest level in more than two weeks at 108.06. As of writing, the pair was trading at 108.09, losing 0.68% on a daily basis.

Citing courses familiar with talks, Bloomberg on Thursday reported that China was unwilling to comply with the structural changes that the US requested as part of the trade deal. Reflecting the risk-averse atmosphere, the 10-year US Treasury bond yield is down 3.6% on a daily basis at 1.708%.

Earlier in the day, commenting on the policy outlook after the Bank of Japan (BoJ) left its policy rate unchanged as expected, Governor Kuroda repeated that low rates were expected to continue "far beyond spring of 2020" and noted that the global economic recovery was being delayed by half a year more than previously thought.

On the other hand, with today's core Personal Consumption Expenditures (PCE) Price Index ticking down to 1.7% on a yearly basis in September as expected, the US Dollar Index failed to gain recovery momentum and now remains on track to close the fourth straight day in the negative territory. As of writing, the index was down 0.15% on the day at 97.30.

Technical levels to consider