- US-China trade pessimism/geopolitical tensions benefitted the JPY’s safe-haven status.
- Sliding US bond yields undermined the USD demand, though did little to impress bears.
The USD/JPY pair lacked any firm directional bias and was seen oscillating in a 15 pips narrow trading band at the start of a new trading week.
The pair stalled last week’s corrective slide and once again managed to find some support near mid-107.00s, despite not so encouraging trade-related developments and the prevalent cautious mood. The global risk sentiment took a hit on Friday after the US President Donald Trump said that he is now interested in making a “limited” trade deal with China.
Traders uninspired amid thin liquidity conditions
This was followed by news that China’s trade delegation cancelled a visit to the US farms and left the United States earlier than planned, which now seems to have dampened prospects for an interim deal. Adding to this, escalating geopolitical tensions in the Middle East further weighed on investors’ sentiment and benefitted the Japanese Yen’s safe-haven status.
The global flight to safety was further reinforced by a sharp slide in the US Treasury bond yields, which kept the US Dollar bulls on the defensive, albeit failed to inspire bearish traders or prompt some fresh selling around the major amid relatively thin liquidity conditions on the back of a bank holiday in Japan in observance of Autumnal Equinox Day.
It will now be interesting to see if the pair is able to gain any meaningful traction or continues with its subdued/range-bound price action as the focus now shifts to speeches by influential FOMC policymakers – New York Fed President John Williams and St. Louis Fed President James Bullard – later during the US trading session.
Technical levels to watch
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