- Trade concerns, slowing global growth continues to benefit JPY’s safe-haven status.
- The USD bulls remained on the defensive in the wake of Trump’s criticism on Thursday.
- Bears are likely to wait for a sustained breakthrough mid-105.00s – multi-month lows.
The USD/JPY pair traded with a negative bias for the third consecutive session on Friday and remained well within the striking distance of multi-month lows – set on Wednesday.
Against the backdrop of the recent escalation in the US-China trade tensions, growing market concerns over the health of the global economy continued underpinning the Japanese Yen’s relative safe-haven demand and kept exerting some downward pressure on the major.
Traders take cues from upbeat Japanese GDP, weaker USD
The Japanese currency was further supported by Friday’s better-than-expected domestic data – showing that the economic growth stood at 0.4% during the second quarter of 2019 – with coupled with a subdued US Dollar price action further collaborated to the pair’s weaker tone.
The USD bulls remained on the defensive in the wake of some renewed weakness in the US Treasury bond yields and the US President Donald Trump’s latest criticism on Thursday that the Fed’s high-interest rate level is keeping the greenback stronger, making it difficult for the US companies to compete.
Meanwhile, given that China weakened the Yuan reference rate further and the recent shift in trade policy, growing expectations for an imminent rate cut by the Fed and a possible dovish tilt in the forward guidance might continue to exert some downward pressure on the major.
Sustained weakness below multi-month lows – around mid-105.00s – will reinforce the bearish outlook and pave the way for an eventual break below the key 105.00 psychological mark towards challenging the early-January flash-crash lows near the 104.70 region.
Friday’s US economic docket – featuring the release of Producer Price Index (PPI), might influence the USD price dynamics and collaborate towards producing some short-term trading opportunities later during the early North-American session.
Technical levels to watch
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