- Escalating geopolitical tensions continue to benefit JPY’s safe-haven status.
- A goodish pickup in the USD demand failed to lend any support to the pair.
The USD/JPY pair finally broke down of its Asian session consolidation phase and tumbled to fresh session lows, around mid-107.00s in the last hour.
The pair failed to capitalize on its early uptick to an intraday high level of 107.77 and met with some aggressive supply in reaction to a sudden turnaround in the global risk sentiment. Against the backdrop of escalating geopolitical tensions in the Middle East, fading optimism over the US-China trade talks and Monday’s disappointing Euro-zone PMI prints fueled fears of a global economic slowdown and benefitted the Japanese Yen’s safe-haven status.
Reviving safe-haven demand exerts some fresh pressure
A sharp fall across European equity markets was evident of deteriorating global risk sentiment and was further reinforced by sliding US Treasury bond yields, which seemed to be one of the key factors behind the pair’s latest leg of a downfall of around 30 pips in the last hour. Meanwhile, a goodish pickup in the US Dollar demand, primarily led by intraday weakness in the shared currency, did little to lend any support to the major.
It, however, remains to be seen if the ongoing pullback from multi-week tops, set last week, marks the resumption of the prior well-established bearish trend or the pair continues to show some resilience at lower levels as market participants now look forward to scheduled speeches by influential FOMC members – New York Fed President John Williams and St. Louis Fed President James Bullard – for a fresh impetus later during the US session.
Technical levels to watch
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