“¢ Global growth concerns driving investors towards traditional safe-haven currencies.
“¢ Sliding US bond yields add to the weakness, a modest USD uptick limit downside.
“¢ Investors’ focus remains on the latest BoJ monetary policy update, due on Wednesday.
The USD/JPY pair extended its sideways consolidative price action and was seen oscillating in a narrow trading band near the lower end of its daily trading range.
After yesterday’s rather directionless move, the pair met with some fresh supply on Tuesday and now seems to have confirmed a bullish failure just ahead of the key 110.00 psychological mark.
Risk sentiment took a hit after data showed the world’s second-largest economy grew at its slowest pace in nearly three decades last year and the IMF lowered its global growth forecasts for 2019/2020.
The risk-off mood was evident from a fresh wave of selling around global equity markets, which was seen underpinning the Japanese Yen’s safe-haven demand and prompted some selling on Tuesday.
The global flight to safety took some toll off the US Treasury bond yields and further collaborated to the pair’s weaker tone, though a modest US Dollar uptick helped limit further downside, at least for the time being.
Moreover, traders also seemed reluctant to place aggressive bets ahead of the latest BoJ monetary policy update, due to be announced during the Asian session on Wednesday, which might provide some fresh directional impetus.
Technical outlook
Valeria Bednarik, FXStreet’s own American Chief Analyst writes: “The USD/JPY pair eases in range, holding on to most of its previous week’s gains, and more relevant, above the 61.8% retracement of its daily decline between 111.41 and 105.16 at 109.05. The 4 hours chart indicates that the positive momentum is fading, as technical indicators keep easing within positive levels, now getting close to their midlines.”
“The 100 SMA is below the current level but with a mild bearish slope, while the 200 SMA heads firmly lower at around 110.55, also reflecting that bulls are losing conviction. The immediate support is 109.20, with a break below it most likely favoring a decline toward the 108.70/80 price zone,” she added further.
Share
