- Risk-off remains at full steam amid falling global yields, US equity futures.
- Escalating US-China trade tensions, US-Iran rift and global growth fears weigh.
- Risk trends to dominate amid lack of relevant US macro news.
The bears have again tightened their grip last hour, knocking-off USD/JPY back near the two-week lows of 109.15 reached in early Asia.
The spot revisited the lows, as the selling interest around the Treasury yields gathers pace, with the US benchmark 10-year Treasury yields threatening to test the lowest levels since September 2017. At press time, the 10-year Treasury yields prints fresh 20-month lows at 2.231, down -1.64% on the day.
The safe-haven demand for the Yen remains boosted at the expense of the higher-yielding assets (such as yields) amid mounting global recession fears, emanating from escalating US-China trade row. A renewed risk-aversion wave gripped the markets after the Chinese media reported that China was considering restricting rare earths exports to the US. China seriously considering restricting rare earth exports to US – Global Times
Moreover, the looming geopolitical tensions between the US and Iran also continue to dampen the risk sentiment. According to the latest news, the US National Security Advisor Bolton threaten Iran of a strong US response.
In the day ahead, the trade pessimism will continue to remain a drag on the risk sentiment that could expose the pair to further downside risks. Therefore, a breach of the 109 support area cannot be ruled amid risk-aversion and a lack of significant US economic news.
USD/JPY Technical Levels
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