“¢ The ongoing slump in bond yields continues to fuel concerns over slowing global growth.
“¢ Deteriorating risk sentiment remained supportive of the JPY’s relative safe-haven status.
“¢ Traders now eye today’s release of US final Q4 GDP growth print for some fresh impetus.
The USD/JPY pair met with some fresh supply on Thursday, with bears now eyeing a sustained break weakness back below the key 110.00 psychological mark.
A further deterioration in the global risk-appetite, as depicted by weaker sentiment around equity markets, provided a strong boost to the Japanese Yen’s safe-haven demand and was seen as one of the key factors exerting some fresh downward pressure on the major.
The recent inversion of the 3-month and 10-year US Treasury bond yields for the first time since 2007 has been fueling concerns about a possible recession in the world’s largest economy and continued denting investors’ appetite for perceived riskier assets.
In fact, the yield on the benchmark 10-year US Treasury note continued falling through the Asian session on Thursday and dropped to a fresh 15-month low on Thursday, while Japan 10-year bond yields fell further into negative territory – hitting its lowest level since August 2016.
It would now be interesting to see if the pair is able to defend the mentioned handle or bears maintain their dominant position. The focus now shifts to today’s key release of the final US GDP print, which might influence the US Dollar price dynamics and produce some short-term trading opportunities.
Technical Outlook
As Omkar Godbole, FXStreet’s own Analyst and Editor explained, “the 5- and 10-day moving averages (MAs) are trending south. The transition from the rising wedge to the descending channel, as seen over the last four weeks or so, represents a bullish-to-bearish trend change.”
“As a result, the support at 109.70 could soon come into play. A violation there would expose the descending channel, currently at 109.30,” he added further.
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