“¢ Global trade war fears triggered a fresh wave of global risk-aversion trade.
“¢ Reviving safe-haven demand helps offset weaker Japanese macro data.
“¢ A goodish USD rebound does little to lend any support and ease the bearish pressure.
The USD/JPY pair extended its rejection slide from the very important 200-day SMA and refreshed weekly lows in the past hour, albeit quickly recovered few pips thereafter.
Against the backdrop of growing fears of a full-blown global trade war, investors turned cautious ahead of the G7 summit and boosted the Japanese Yen’s safe-haven appeal.
Market nervousness was evident from a global wave of risk-aversion trade and retracing US Treasury bond yields, which kept exerting downward pressure on the major for the second consecutive session.
With traders largely ignoring today’s downbeat Japanese macro data, a goodish pickup in the US Dollar demand also did little to lend any support and stall the pair’s downfall to the 109.20 horizontal support area.
The selling pressure now seems to have abated a bit amid a modest rebound in European equity markets, with the pair rebounding around 25-pips from lows to currently trade just below mid-109.00s.
In absence of any major market moving economic releases, the incoming news from the key G7 meeting would influence broader market risk sentiment and eventually provide some fresh impetus on the last trading day of the week.
Technical levels to watch
Weakness below the 109.20 level is likely to find support near the 109.00 handle, which if broken might accelerate the slide towards 108.75-70 horizontal zone before the pair eventually drops back to retest 100-day SMA support near the 108.10-108.00 region.
On the upside, any meaningful recovery back above the 109.70-75 immediate hurdle is likely to confront fresh supply near the key 110.00 psychological mark and is followed by resistance near the 110.15-20 region (200-DMA).
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