“¢ US-China trade optimism dampens JPY’s relative safe-haven demand.
“¢ Subdued USD demand fails to provide any additional boost to the major.
“¢ This week’s key event/data eyed for some fresh directional impetus.
The USD/JPY pair failed to capitalize on the early Asian session uptick to an intraday high level of 110.86 and is currently placed at the lower end of its daily trading range.
The pair did get a minor lift in reaction to the US President Donald Trump’s latest posts on Twitter, saying that he will delay increasing tariffs on $200 billion of Chinese imports to 25% from 10% on March 1 – citing substantial progress in the trade talks.
The news triggered a fresh wave of global risk-on trade and was eventually seen denting the Japanese Yen’s relative safe-haven status, albeit a subdued US Dollar price action failed to provide any meaningful impetus and kept a lid on any further up-move.
The greenback held on the defensive at the start of a new trading week and continues to be weighed down by firming market expectations that the Fed might refrain from raising interest rates any further, evident from the recent decline in the US Treasury bond yields.
Looking at the broader picture, the pair remains well within a multi-day-old narrow trading band, awaiting fresh catalyst. There isn’t any major market-moving economic data due for release and hence, the USD price dynamics might continue to act as an exclusive driver of the pair’s momentum on Monday.
Moving ahead, this week’s key event/data risks – including the Fed Chair Jerome Powell’s semiannual testimony and the closely watched US monthly jobs report (NFP), might play an important role in determining the pair’s next leg of a directional move.
Technical outlook
Omkar Godbole, FXStreet’s own Analyst and Editor writes, “with trade optimism penciled in, the pair could soon drop below 110.25 (low clocked after wedge breakdown), validating the bull-to-bear trend change confirmed on Feb. 15 and opening doors to 4H 200-candle MA, currently placed near 109.60.”
“Supporting the bearish case is the below 50-reading on the 4H RSI and the bearish crossover between the 50- and 200-week MAs, witnessed on Feb. 6/Feb. 7,” he added further.
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