- USD/JPY steady in Tokyo following major risk-off slide.
- USD/JPY trades at 108.24, trading between 108.17/34.
USD/JPY has established in Asia at the start of the week in markets that are consolidating the recent turmoil following heightened concern over global trade and growth. Trade wars pose a tremendous risk to the stabilisation of geopolitics and investors are moving out of riskier assets which have supported the safe haven yen trade. USD/JPY has fallen over -2.35% in May, while looking to the commodity space, the price of WTI is now down over 17% for the same period owing to a lack of demand on a forward basis.
The latest run of risk-off came on the back of last week’s announcements from Trump over trade, illegal immigration and Mexico. However, it is early days and Mexico’s President has responded seeking to work with the U.S. and resolve matters which should be risk-positive for the start of this week.
President Andres Manuel Lopez Obrador said Mexico could be ready to step up such measures in order to reach a deal with the United States. Mexico’s president said he expected “good results” from talks planned in Washington next week. Mexican Foreign Minister will hold a news conference in Washington DC on Monday.
USD/JPY levels
Valeria Bednarik, the Chief Analyst at FXStreet, explained that the daily chart for USD/JPY shows that the pair slumped after faltering around a bearish 20 DMA, which extends its bearish slope below the larger ones:
“The Momentum indicator retreated from its mid-line, skewing the risk to the downside, while the RSI maintains a sharp downward slope, currently at 28, also favoring further declines ahead. Shorter term, and according to the 4 hours chart, the risk is also leaned to the downside, as technical indicators head south almost vertically, maintaining their bearish slopes despite being in extreme oversold levels. In this last time frame, moving averages present downward slopes far below the current level, reinforcing the bearish case.”
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