“¢ A goodish bounce in equities dampens JPY’s safe-haven status and lends some support.
“¢ US trade deficit narrows more than expected to $51.1 billion and remains supportive.
“¢ Bulls lacked strong conviction amid yield curve inversion-led growing recessionary fears.
The safe-haven Japanese Yen lost some traction since the mid-European session and helped the USD/JPY pair to quickly reverse a dip to an intraday low level of 110.24.
The pair failed to capitalize on the overnight goodish up-move and remained depressed amid growing recessionary fears, triggered by the recent inversion of the 3-month and 10-year Treasury yields – for the first time since 2007.
A sudden mid-session drop in the US Treasury bond yields dampened investors appetite for riskier assets, which eventually boosted the Japanese Yen’s safe-haven bid and exerted some intraday downward pressure on the major.
With some initial signs of stability returning back to equity markets, the pair got an additional boost following the release of US trade balance figures, showing that deficit narrowed more than expected to $51.1 billion in January.
Bulls, however, lacked any strong conviction and refrained from placing any aggressive bids, which eventually turned out to be the only factor that might keep a lid on any meaningful intraday up-move, at least for the time being.
Technical levels to watch
Any subsequent up-move beyond the 110.65-70 region is likely to confront immediate resistance near the 111.00 handle, above which a bout of short-covering could extend the momentum further towards the 111.70-80 supply zone.
On the flip side, weakness below session lows might find some decent support near the key 110.00 psychological mark, which if broken might accelerate the slide towards 109.70 zone (multi-week lows) en-route 109.40-35 support area.
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