“¢ The risk-off mood continues to underpin JPY’s safe-haven appeal.
“¢ BoJ tweaks bond purchase frequencies for September.
“¢ Technical selling below 200-hour SMA aggravates the slide.
The USD/JPY pair finally broke down of its Asian session consolidation phase and tumbled to fresh weekly low, farther below the 111.00 handle.
Renewed US-China trade war fears weighed on investors’ sentiment, evident from weakness around European equity markets, was seen benefitting the Japanese Yen’s safe-haven appeal.
The Japanese Yen was further supported by an uptick in the Tokyo Core CPI y/y, released today, which coupled with a weaker tone surrounding the US Dollar and the US Treasury bond yields kept exerting downward pressure.
Meanwhile, the latest leg of sudden drop followed the release of BoJ’s schedule for outright purchases of Japanese government securities, wherein the frequency of purchases for some JGBs, with the residual maturity of 1 to 10-years, was lowered from six to five for September.
Adding to this, technical selling, following a decisive break below 200-hour SMA support near the 111.00 handle could also be one of the factors further collaborating to the pair’s sharp decline over the past hour or so.
Currently hovering around the 110.75-70 region, the pair now seems vulnerable to extend the ongoing downfall amid relatively thin US economic docket, highlighting the release of UoM consumer sentiment index.
Technical levels to watch
Immediate support is now pegged near the 110.60 region, below which the pair is likely to head towards testing 100-day SMA support near the 110.30 region en-route the key 110.00 psychological mark.
On the flip side, any recovery attempts might now confront fresh supply near the 111.00 handle, which if cleared might trigger a short-covering bounce towards back towards 111.30-40 supply zone.
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