“¢ The global flight to safety continues to underpin JPY’s safe-haven status.
“¢ Bearish traders seemed rather unaffected by a goodish USD rebound.
“¢ Today’s mostly in-line US housing market data does little to lend support.
The USD/JPY pair held on to its offered tone through the early North-American session and dropped to fresh three-week lows in the last hour.
The pair extended last week’s sharp retracement slide from over one-month tops and remained under some heavy selling pressure for the third consecutive session on Tuesday. After overnight steep falls on Wall Street, growing concerns over the economic impact of the US-China trade conflicts added to risk-off sentiment in global financial markets and underpinned the Japanese Yen’s safe-haven status.
The global flight to safety was evident from the ongoing slide in the US Treasury bond yields, with the benchmark 10-year Treasury notes hovering near seven-week lows, and was eventually exerting downward pressure on the major. Bearish traders seemed rather unaffected by a goodish rebound in the US Dollar, which remained supported by today’s mostly in-line US housing market data – building permits and housing starts.
“The increase in US housing starts suggests that construction companies are finding good demand and that a strong labor market and rising wages are partially compensating for ever higher selling prices and mortgage costs,” Joseph Trevisani, Senior Analyst at FXStreet noted after the report was made public this Tuesday.
Technical outlook
Valeria Bednarik, FXStreet’s own American Chief Analyst writes: “Technically, the 4 hours chart shows that the pair is developing below all of its moving averages, while technical indicators remain near oversold territory, lacking directional strength, leaning the risk to the downside. The 100 DMA, at around 112.00 is a line in the sand, as bulls will give up on a break below the psychological threshold, leading to a steeper decline ahead.”
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