“¢ The ongoing USD pull-back prompts some fresh selling on Wednesday.
“¢ Risk-on mood fails to lend any support, albeit might help limit deeper losses.
The USD/JPY pair struggled to build on overnight modest rebound from over one-week lows and met with some fresh supply on Wednesday.
A fresh wave of global risk-on mood, which tends to undermine the Japanese Yen’s safe-haven appeal, coupled with a goodish pickup in the US Treasury bond yields assisted the pair to find decent support near the 111.00 round figure mark, representing a short-term ascending trend-line support, extending from late May through lows touched in June/July and prompted some short-covering move.
The rebound, however, lacked any strong follow-through and remained capped near weekly tops, around mid-111.00s amid the ongoing US Dollar pull-back. Signs of stability in the Chinese Yuan, despite escalating US-China trade disputes, halted the recent USD upsurge and turned out to be one of the key factors exerting some downward pressure on the major.
In absence of any major market moving economic releases, the USD price dynamics might continue to act as an exclusive driver of the pair’s momentum. Hence, it would be interesting to see if the pair continues to find some buying interest near the mentioned trend-line support or bearish pressure drags the pair below 50-day SMA to finally confirm a near-term bearish breakdown.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet writes, “USD/JPY could revisit the last week’s high of 112.15 and could see a sustained break higher if US-Japan bond yield differentials spike. A close below 50-day MA would confirm a bull-to-bear trend change and shift risk in favor of a drop to 100-day MA, currently lined up at 109.56.”
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