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  • Risk-off continues to weigh over USD/JPY pair in Asia.
  • USD/JPY has dropped below 110.00 for the first time since March 28.
  • Further losses could be seen if the risk-off worsens after China trade data.

The bid tone around the Japanese yen strengthened further in the Asian session, pushing the USD/JPY below 110.00 for the first time March 28.

At press time, the pair is trading at 109.96, having hit a high of 110.29 earlier today.

The Japanese yen seems to be benefitting from Trump’s re-escalation of trade war and the resulting flight to safety. After all, the JPY is widely considered a safe haven currency.

On Sunday, Trump tweeted that he would raise rates, tariffs on $200 billion worth of Chinese goods to 25% from the current 10%, catching markets off guard and pouring cold water over the optimism generated by the repeated assurances by both Beijing and Washington that trade talks have been progressing well.

Despite Trump’s tough talk, China’s Vice Premier is set to travel to Washington for the next round of negotiations, meaning there is still hope that both parties may reach a common ground.

Investors, however, have turned risk-averse even since Trump tweeted his intentions. The Dow futures had dropped more than 400 points in the Asian session on Monday. Further, the index shed 473 points on Tuesday, sending safe havens higher.

The USD/JPY pair reversed from 111.00 and fell 0.46% to 110.23, reinforcing the downside break of the ascending trendline from Jan. 4 lows witnessed on Monday and is currently trading in the red, possibly tracking the losses in the Asian equities. As of writing, the Shanghai Composite index is reporting a 0.5% drop.

The pair will likely test the key support at 109.70 (March 25 low) in the next few hours if China’s trade data disappoints expectations, boosting fears of a deeper economic slowdown.

Pivot points