“¢ A strong follow-through USD demand helps regain positive traction.
“¢ JPY weighed down by risk-on mood and provides an additional boost.
“¢ Mixed US macro data does little to provide any meaningful impetus.
The USD/JPY pair held on to its modest daily gains near weekly tops and is now looking to build on the momentum back above the very important 200-day SMA.
A goodish pickup in the US Dollar demand helped the pair to recover early lost ground to an intraday low level of 109.69. The up-move got a strong boost after the US President Donald Trump decided against the harshest measures on China investments, with investors now looking at it as a less confrontational approach toward China than expected.
The news triggered a global wave of risk-on trade, evident from a sharp recovery in European stock markets and a sudden spike in the US index futures, which eventually weighed on the Japanese Yen’s safe-haven appeal and assisted the pair to jump back above the key 110.00 psychological mark.
Meanwhile, the pair has a rather muted reaction to the mixed US economic releases – better-than-expected goods trade balance data that was largely negated by weaker durable goods orders, with improving risk-appetite turning out to be an exclusive driver of the pair’s momentum through the early North-American session.
Technical levels to watch
A follow-through buying interest has the potential to continue lifting the pair further towards 110.65-70 supply zone en-route the 111.00 handle. On the flip side, the 110.00 handle now seems to protect the immediate downside, which if broken could accelerate the fall back towards 109.75 horizontal level before the pair eventually drops back to the 109.40-35 support area.
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