“¢ Escalating US-China trade tensions continue to underpin JPY’s safe-haven demand.
“¢ Subdued USD price action does little to lend any support amid thin liquidity conditions.
The USD/JPY pair held on to its weaker tone through the early European session and is currently placed at the lower end of its daily trading range, below the 111.00 handle.
The pair struggled to build on Friday’s goodish rebound from over one-week lows and met with some fresh supply near the 111.20 region amid reviving safe-haven demand.
Escalating global trade tensions weighed on investors’ appetite for riskier assets and the same was evident from a weaker tone around equity markets. The risk-off mood benefitted the Japanese Yen’s safe-haven status and was seen as one of the key factors exerting some fresh downward pressure at the start of a new trading week.
Meanwhile, a subdued US Dollar price action also did little to lend any support, albeit bulls have managed to defend Friday’s swing lows around the 110.70, at least for the time being.
The US markets are closed in observance of Labor Day and hence, holiday-thinned liquidity conditions might hold traders back from placing any aggressive bets ahead of this week’s important releases scheduled at the start of a new month, including the keenly watched US non-farm payrolls data.
Technical outlook
Omkar Godbole, FXStreet’s own Analyst and Editor explains, “the currency pair is trading well above the long-run falling trendline drawn from the August 2015 high and the December 2015 high, however, the rejection at 200-week moving average in July and the failure to close above 111.49 last week has neutralized the immediate bullish outlook.”
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