• A modest pickup in the USD demand helps recover early lost ground.
• Further gains likely to remain capped amid global risk-aversion trade.
• Escalating US-China trade war fears underpin JPY’s safe-haven demand.
The USD/JPY pair reversed an Asian session dip to 110.75 area and is currently placed at the top end of its daily trading range.
The pair extended overnight retracement from the 111.40 supply zone and was further weighed down by global flight to safety, led by escalating US-China trade tensions.
The Trump administration's latest threat to impose additional tariffs on extra $200 billion worth of Chinese imports resulted into a fresh wave of global risk aversion trade and was eventually seen underpinning the Japanese Yen's safe-haven appeal.
The downtick turned out to be short-lived, with a modest pickup in the US Dollar demand helping the pair to quickly recover over 30-pips from session lows. Further gains, however, might be capped amid the ongoing slide in the US Treasury bond yields and the prevalent risk-off environment.
On the economic data front, today's release of the latest US PPI print might influence the USD price dynamics, which combined with the broader market risk sentiment would help traders grab some meaningful opportunities.
Technical levels to watch
Any meaningful up-move beyond 111.15 level is likely to confront fresh supply near the 111.40 region, above which the pair seems all set to aim towards reclaiming the 112.00 handle.
On the flip side, the 110.80-75 region might continue to protect the immediate downside, which if broken could accelerate the fall towards 110.40-35 intermediate support ahead of the key 110.00 psychological mark.
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