- Reviving safe-haven demand underpinned the JPY and prompts some selling.
- A modest pickup in the USD demand might help limit the downside, for now.
- Traders now eye US retail sales data and Powell’s speech for a fresh impetus.
The USD/JPY pair surrendered a major part of its early uptick and is currently placed in the neutral territory, around the 107.95 region.
The pair continued with its struggle to sustain/build on the momentum beyond the 108.00 handle, with a combination of negative factors prompting some intraday selling during the early European trading session.
The prevailing cautions mood supported demand for traditional safe-haven assets – including the Japanese Yen and turned out to be one of the key factors behind the pair’s sudden drop of around 15-pips over the past hour or so.
Bearish traders further took cues from a mildly softer tone surrounding the US Treasury bond yields, albeit a modest pickup in the US Dollar demand might help limit the downside, at least for the time being.
It would now be interesting to see if the pair can find any fresh buying at lower levels or the current pullback marks the resumption of the recent downfall as the focus now shifts to the release of US monthly retail sales figures.
Traders on Tuesday will also take cues from the Fed Chair Jerome Powell’s scheduled speech, which might provide some fresh insight over the central bank’s policy outlook and influence the near-term USD price dynamics.
Technical levels to watch
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