“¢ A fresh wave of global risk-aversion trade underpins JPY’s safe-haven status.
“¢ Disappointing US monthly retail sales data adds to the latest leg of downslide.
“¢ The ongoing slump in the US bond yields does little to ease the bearish pressure.
Selling pressure around the USD/JPY pair picked up the pace in the last hour, dragging it back closer to the 109.00 handle, or near 3-1/2 month lows set on Monday.
Against the backdrop of renewed market jitters, evident from a sharp fall in the US Treasury bond yields, the Japanese Yen attracted some fresh safe-haven flows on Wednesday and was seen as one of the key factors exerting downward pressure on the major.
The pair lost some additional ground, erasing the previous session’s modest recovery gains following the disappointing release of US monthly retail sales data, showing a monthly decline of 0.2% in April as compared a modest growth of 0.2% expected.
Meanwhile, the upbeat release of Empire State Manufacturing Index and a mildly positive tone surronding the US Dollar did little to impress the bulls, with a fresh wave of global risk-aversion trade turning out to be an exclusive driver of the pair’s slide on Wednesday.
It would now be interesting to see if the pair continues finding some support at lower levels, near the 109.00 handle, or the ongoing slide marks the resumption of the recent retracement slide from yearly tops set on April 24.
Technical outlook
As Valeria Bednarik, FXStreet’s own American Chief Analyst writes: “The USD/JPY pair is bearish according to intraday technical readings, as, in the 4 hours chart, it resumed its decline after failing to surpass a bearish 20 SMA, while the 100 and 200 SMA continue heading south far above the current level. Technical indicators in the mentioned timeframe turned lower after a failed attempt to re-enter positive ground, maintaining strong bearish slopes, also favoring another leg lower.”
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