- The USD remained well supported by diminishing odds of an aggressive Fed easing.
- Reviving safe-haven demand underpinned the JPY and exerts some downward pressure.
- A positive trade-related development should help limit further downside, at least for now.
The USD/JPY pair ticked lower through the early European session on Wednesday and eroded a part of the overnight upsurge to near one-week tops.
The pair failed to capitalize on its recent positive momentum and for now, seems to have snapped three consecutive days of winning streak, shrugging off the prevalent bullish sentiment surrounding the US Dollar.
Against the backdrop of tempered expectations for a 50 bps interest rate cut by the Fed, a deal to raise the US government debt ceiling helped the USD to extend its recent bullish and climb to near five-week tops.
Adding to this, a mildly positive tone around the US Treasury bond yields further underpinned the greenback, albeit failed to impress bullish traders and did little to provide any meaningful impetus to the major.
Meanwhile, a modest revival in demand for traditional safe-haven assets, amid concerns over the global economic outlook, was seen lending support to the Japanese Yen and exerting some downward pressure on the major.
It is worth reporting that the International Monetary Fund (IMF) on Tuesday lowered its global growth forecast for the second time this year and now see the world economy to expand by 3.2% in 2019 and 3.5% next year.
The downside, however, is likely to remain cushioned on the back of a positive trade-related development, wherein the officials from the US and China were reported to begin in-person trade talks sometime next week.
Later during the early North-American session, the US economic docket – highlighting the release of flash manufacturing and services PMIs, will now be looked upon for some short-term trading opportunities.
Technical levels to watch
Share
