• Risk sentiment took a sharp knock after the latest trade-related headlines.
• The global flight to safety underpinned the JPY and prompts fresh selling.
• Sliding US bond yields kept the USD on the defensive and did little to support.
The USD/JPY pair extended its intraday pullback from near two-week tops and was now seen retreating further below the key 110.00 psychological mark.
The pair initially built on last week's goodish bounce from multi-month lows and added to Friday's positive move, unaffected by upbeat Japanese Q1 GDP report. Bullish traders took cues from surprisingly positive outcome from Australian election and Indian election exit polls, albeit failed to capitalize on the early positive move amid reviving safe-haven demand.
The early risk-on mood faded rather quickly on the back of news that China is considering suspending business with suppliers who agreed to halt supplying Huawei and may temporarily hike tariffs for Apple. The initial market reaction saw major European equity indices turn sharply lower for the day and benefitted the Japanese Yen's relative safe-haven status.
The global flight to safety was further reinforced by a modest downtick in the US Treasury bond yields, which kept the US Dollar bulls on the defensive and further collaborated to the pair's intraday slide of around 40-pips to levels back below the 110.00 round figure mark.
It would now be interesting to see if the pair is able to attract any buying interest at lower levels or the current pullback marks the end of the recent corrective bounce amid absent relevant market moving US economic releases and ahead of the Fed Chair Jerome Powell's scheduled speech during the early Asian session on Tuesday.
Technical levels to watch
As Yohay Elam, FXStreet's own Analyst writes: “The Technical Confluences Indicator shows that USD/JPY has massive support around 109.80 where a dense cluster of levels awaits it. That includes the Fibonacci 161.8% one-month, the Bollinger Band 4h-Middle, the Simple Moving Average 200-1h, the Fibonacci 38.2% one-week, the Fibonacci 61.8% one-day, the Pivot Point one-day Support 1 and more. If it breaches this support region, the next significant support is at 109.09 where the Fibonacci 161.8% one-day and the PP 1m-S3 converge.”
“Its initial upside target is 110.51 to 110.68 region where we note the SMA 100-4h, the SMA 100-1d, the PP 1w-R1, the PP 1d-R2, and the PP 1m-S1. Looking to higher ground, USD/JPY may target 111.42 where we note a confluence including the Fibonacci 61.8% one-month and the SMA 200-1d,” he added further.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.