“¢ A goodish USD rebound offset by retracing US bond yields.
“¢ Traders shrug off disappointing Japanese macro data.
“¢ Reviving safe-haven demand lifts JPY and adds to the pressure.
After an initial uptick to 109.85 level, the USD/JPY pair met with some fresh supply and turned lower for the second consecutive session.
The pair extended its rejection slide from the very important 200-day SMA support and has now moved within striking distance of weekly lows set on Monday, despite a goodish pickup in the US Dollar rebound.
Bearish traders seemed to track a follow-through retracement in the US Treasury bond yields, with the prevalent cautious sentiment providing an additional boost to the Japanese Yen’s safe-haven appeal and further collaborating to the pair’s slide back below mid-109.00s.
Meanwhile, the market seems to have largely ignored weaker than expected Japanese economic data – current account and final Q1 GDP print, with reviving safe-haven demand turning out to be an exclusive factor dragging the pair on the last trading day of the week.
It would now be interesting to see if the pair is able to find any support at lower levels or continued with its ongoing downfall as the market focus now shifts to the key G7 meeting, scheduled to start from today in Canada.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet writes: “the bears are winning here and could send the pair well below 107.32 (September low) in a couple of weeks.”
“Only a weekly close above the falling trendline (drawn from August 2015 high and December 2015 high) would signal a bullish breakout,” he further added.
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