“¢ The incoming trade-related headlines benefitted the safe-haven JPY.
“¢ The USD continues to be weighed down by increasing Fed rate cut bets.
“¢ A sustained break below the 108.00 mark needed to confirm further slide.
The USD/JPY pair held on to its weaker tone through the early North-American session and is currently placed at the lower end of its daily trading range, just above the 108.00 handle.
A combination of negative factors failed to assist the pair to build on the overnight goodish bounce from nearly five-month lows, rather prompted some fresh selling on Thursday. The initial leg of intraday slide came after the US President Donald Trump’s comments that there was not enough progress made in a discussion between the US and Mexican officials.
This was followed by a flurry of trade-related headlines, wherein Trump said that tariffs on China could be raised by another $300 billion if necessary. Responding to the latest threat, China’s Commerce Ministry Spokesman said that China will take retaliatory measures if the US further escalates the trade war and continued benefitting the Japanese Yen’s safe-haven status.
On the other hand, the US Dollar failed to capitalize on the previous session’s recovery – led by upbeat US ISM non-manufacturing PMI and remained on the defensive amid increasing Fed rate cut bets. The USD weakness could further be attributed to the post-ECB spike in the shared currency and the latest disappointment from the second-tier US economic releases.
It would now be interesting to see if the pair is able to defend the mentioned handle or continues with its recent bearish trajectory as market participants start repositioning for Friday’s important release of the closely watched US monthly jobs report – popularly known as NFP.
Technical levels to watch
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