- Optimism over US-China trade truce largely offset by global growth concerns.
- Reviving safe-haven demand underpins JPY demand and exerts some pressure.
- Sliding US bond yields weigh on the USD and collaborate to the weaker tone.
The USD/JPY pair extended its sideways consolidative price action and remained capped below mid-108.00s through the Asian session on Tuesday.
The pair failed to capitalize on the weekly bullish gap opening, with a combination of diverging forces failing to provide any meaningful impetus and leading to a subdued/range-bounce price action over the past 24-hours or so.
The euphoric reaction to the latest positive trade-related development – wherein the US and China agreed to resume negotiations, turned out to be rather short-lived and was largely offset by weaker global manufacturing activity.
Concerns over slowing global economic growth weighed on investors’ sentiment – as depicted by a cautious mood around equity markets, which underpinned the Japanese Yen’s safe-haven demand and exerted some pressure.
A slight deterioration in the global risk sentiment was evident from some renewed weakness in the US Treasury bond yields, which seemed to weigh on the US Dollar and further collaborated towards keeping a lid on the major.
Despite a modest downtick, the pair has managed to hold its neck above the 108.00 round figure mark as investors await this week’s important US macro data before positioning for the next leg of a directional move.
Friday’s release of the closely watched US monthly jobs report – popularly known as NFP, will be the key highlight of this week’s US economic docket and play a key role in influencing the pair’s near-term trajectory.
Technical levels to watch
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