- A fresh leg of a free-fall in the US bond yields prompts some fresh selling on Wednesday.
- Renewed USD weakness does little to lend any support or stall the intraday downfall.
- Bulls showed some resilience at lower levels amid stability in the global equity markets.
The USD/JPY pair trimmed a part of its early downfall and has managed to recover around 35-pips from the Asian session lows to sub-106.00 level.
Despite steps taken PBOC to contain the ongoing slide in the Yuan, the pair on Tuesday failed to capitalize on its intraday recovery move and started retreating from levels just above the 107.00 round figure mark. The pair extended its overnight pullback on Wednesday and was further weighed down by a combination of factors.
The global risk sentiment remains fragile in the wake of the recent escalation in the US-China trade tensions, which continued benefitting the Japanese Yen’s safe-haven status. This coupled with a fresh leg of a free-fall in the US Treasury bond yields further collaborated to the pair’s sudden fall during the early part of Wednesday’s trading session.
In fact, the yield on the benchmark 10-year US government bond dropped to its lowest level since Oct. 2016, which undermined the US Dollar demand and did little to lend any support to the major. The pair, however, showed some resilience below the 106.00 handle and attracted some buying at lower levels amid stability in equity markets.
Meanwhile, the uptick lacked any strong bullish conviction and runs the risk of fizzling out rather quickly as the market focus remains glued to trade-related developments amid absent relevant market moving economic releases. Later during the early North-American session, a scheduled speech by Chicago Fed President Charles Evans will be looked upon for some short-term trading opportunities.
Technical levels to watch
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