USD/JPY slips back below 108.00 amid fresh risk aversion wave

With the risk-off returning to desks and the US Dollar (USD) trimming recent gains, USD/JPY traders reassess the latest recovery while dragging the pair back below 108.00 during early Monday.

The greenback buyers await fresh clues to extend the previous upside, triggered on the Fed rolling back the odds for an extensive rate hike, as overall view remains bearish for the future monetary policy by the US Federal Reserve.

Adding to the pullback could be latest risk aversion as the UK and Iran tension, due to Iran’s capture of the British oil tankers, escalated after lawmakers from both the sides warned each other wherein Tehran remains ready to stretch tension beyond ships.

Elsewhere, the previously upbeat sounding sentiment concerning the US-China trade deal turns sluggish after Chinese media says that the dragon nation has its own preconditions to buy more of the US agricultural production. Further, trade woes got bitter after Reuters reported that China will levy fresh anti-dumping duties on stainless steel imports from the European Union, Indonesia, Japan and South Korea.

Investors may now turn to the Bank of Japan (BOJ) Governor Haruhiko Kuroda’s speech to take clues of how monetary policy could align with the Prime Minister (PM) Shinzo Abe’s upper house election win and the more likely tax hike. It should also be noted that the Fed officials are on their blackout period and hence trade/political news will grab major market attention.

Technical Analysis

While 21-day exponential moving average (EMA) level of 108.10 acts as an immediate upside barrier, 108.65 comprising 50-day EMA can question the pair’s further advances. On the downside, 107.55 and 107.20 seem nearby supports to watch ahead of targeting 106.80 if holding short positions.