“¢ Reviving safe-haven demand does little to prompt any fresh selling.
“¢ Traders even shrugged off weaker US bond yields/modest USD fall.
“¢ Dovish BoJ inflation outlook extends support and helps limit downside.
The USD/JPY pair quickly reversed an early European session dip to 110.40 area and is now headed back to the top end of its daily trading range.
The pair regained some positive traction and moved higher despite a combination of negative factors, ranging from a modest US Dollar retracement and reviving safe-haven demand. The latest US-China trade-related news prompted some profit-taking off the USD bullish positions and also led to a slight deterioration in global risk appetite.
Traders even shrugged off the ongoing retracement in the US Treasury bond yields, with the BoJ’s weaker forecast for domestic inflation now seemed to be the only factor weighing on the Japanese Yen and helping the pair to bounce off lows.
Meanwhile, the market had a rather muted reaction a stronger-than-expected release of the Empire State Manufacturing Index, coming in at 25.0 for June as compared to previous month’s reading of 20.1.
Technical levels to watch
Yohay Elam, FXStreet’s own Analyst writes, “110.50 capped the pair on its way up and also played a role early in the week. 110.90 is emerging as a double double-top. Further above, 111.40 was the high point in May. Even higher, the round level of 112.00 is notable.”
“110.00 remains important due to its psychological nature. It also capped the pair in the past. Lower, 109.50 served as support earlier in June. 109.20 was a stepping stone on the way up during June. Lower, 108.60 was a low point in early May. The last line to watch is 108.10, where the uptrend support line began,” he added further.
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