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  • Bulls failed to capitalize on the early attempted move beyond 109.00 handle.
  • The incoming trade headlines helped to revive the JPY’s safe-haven demand.
  • Falling US bond yields undermined the USD and added to the selling bias.

The USD/JPY pair quickly retreated around 30-35 pips in the last hour and is currently placed near the lower end of its daily trading range, around the 108.75-70 region.
The pair once again failed to find acceptance above the very important 200-day SMA and turned sharply lower in reaction to an intraday turnaround in the global risk sentiment amid not so positive US-China trade headlines.

Focus remains on trade developments

As reported by CNBC’s Beijing correspondent Eunice Yoon, citing a government source, the mood in China about trade deal is pessimistic, especially after the US President Donald Trump denied to rollback tariffs.
The report dampened investors’ appetite for perceived riskier assets and was evident from a drop in equity markets, which provided a strong boost to the Japanese yen’s perceived safe-haven status and exerted some pressure.
The global flight to safety was further reinforced by a weaker tone surrounding the US Treasury bond yields, which undermined demand for the US Dollar and further collaborated to the pair’s latest leg of a downfall.
It will now be interesting to see if the current pullback marks the resumption of the recent bearish trend or is still looked upon as a buying opportunity amid absent relevant market-moving economic releases on Monday.

Technical levels to watch