“¢ A modest uptick in the US bond yields partly offset mounting global trade tensions.
“¢ Traders cover aggressive short positions ahead of the closely watched jobs report.
The USD/JPY pair built on its steady intraday climb from over 2-week lows and turned higher for the day, albeit remained below the 111.00 handle.
Overnight reports, suggesting that the US President Donald Trump’s next trade target was Japan, triggered a fresh wave of global risk-aversion trade. Adding to this, anxiousness over the new US tariffs on around $200 billion worth of Chinese imports further benefitted the Japanese Yen’s safe-haven appeal and prompted some aggressive selling around the major.
The pair slumped over 100-pips and the downfall extended through the Asian session on Friday, dragging the pair to an intraday low level of 110.38. However, a modest uptick in the US Treasury bond yields helped eased the bearish pressure, with some initial signs of stability across European markets extending some additional support and further collaborating to the pair’s goodish intraday rebound of around 40-pips.
Investors also seemed to lighten their bearish bets ahead of today’s key event risk – the closely watched US non-farm payrolls, which might influence Fed rate hike expectations and eventually provide some fresh directional impetus.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet writes: “A weekly close below 110.00 would neutralize the bullish outlook and shift risk in favor of a drop below 109.77 (Aug. 21 low). A daily close below that level would confirm a bullish-to-bearish trend change, that is, the rally from the March low of 104.63 has ended and would open up downside towards 108.90 (50% Fib R of 104.63/113.18). On the higher side, 111.83 is the level to beat for the bulls.”
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