“¢ A global risk-aversion trade underpins JPY and prompts fresh selling.
“¢ A modest USD retracement from 2-week tops adds to the intraday fall.
“¢ Speeches by FOMC members will now be looked upon for some impetus.
The USD/JPY pair faded an early European session spike to levels just above the 110.00 handle and dropped to a fresh session low, around the 109.60 region in the last hour.
The pair continued with its struggle to make it through the key psychological mark, with a fresh wave of global risk-aversion trade underpinning the Japanese Yen’s safe-haven demand and creating bearish pressure on the major.
The risk-off mood, as depicted by a sea of red across equity markets, was further reinforced by sliding US Treasury bond yields, which prompted some US Dollar profit-taking near two-week tops and further collaborated to the pair’s intraday slide.
Despite the pull-back, the pair remains well within a narrow trading range held since the beginning of this week and hence, it would be prudent to wait for a convincing breakthrough in either direction before positioning for the near-term trajectory.
Moving ahead, today’s scheduled speech by influential FOMC members – Fed Governor Richard Clarida and Dallas Fed President Robert Kaplan will now be looked upon for some fresh impetus during the early North-American session.
Technical outlook
Valeria Bednarik, FXStreet’s own American Chief Analyst writes: “The pair remains trapped in a well-limited range just below the 110.00 level, with technical indicators in the 4 hours chart losing upward strength. Bulls will be in charge on a break above 110.16, the yearly high posted earlier this week.”
She further adds, “the pair remains above the 100 and 200 SMA, with the shortest aiming to advance beyond the larger one, both around 109.40. If the pair accelerates its decline below this last, bulls will start to give up, to finally capitulate if the pair losses 109.05, a strong Fibonacci support.”
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