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  • USD/JPY extends losses after taking a U-turn from 108.55.
  • Geopolitical tensions in Korea, Libya and concerning China weigh on the market’s risk-tone.
  • US dollar remains on the mercy of sellers, stock futures part ways from Wall Street’s upbeat performance.

USD/JPY magnifies Monday’s losses while declining to 108.00, down 0.42% on a day, during the initial Tokyo session on Tuesday. The yen pair earlier cheered broad US dollar weakness amid risk-on sentiment. However, the latest weakness of the quote seems to take clues from the shift in trading sentiment that often strengthens the Japanese yen.

In addition to North Korea’s announcement to cut all inter-Korean communication from the South, geopolitical tensions Libya also weigh on the market’s risk-tone off-late.

Also weighing on the previous day’s trading optimism could be the US-China and Sino-Australian tussles. The US policymakers are up for a bill to sanction Chinese policymakers involved in Xinjiang human rights violation while the dragon nation has turned down the Trump administration’s push to remove punitive measures on the American lobsters. Elsewhere, Beijing orders citizens to avoid traveling Australia amid the latest hike in racist attacks to China/Asian citizens.

To portray the risks, the US 10-year Treasury yields drop three basis points to 0.855% whereas Japan’s NIKKEI slip over 0.85% to 22,976 by the press time. It should also be noted that the US stock futures also post mild losses while parting ways from the previous day’s stellar performance of Wall Street.

On the data front, Japan’s April month Labor Cash Earnings drop more than 0.6% forecast to -0.6%, which in turn pushes the pair traders to await May month preliminary Machine Tools Orders, previous -48.3%, from the Asian nation. Other than the data, geopolitical headlines might also help the pair trades ahead of the US session.

Technical analysis

Sustained trading below 200-day SMA level of 108.45 can drag the quote further south towards an ascending trend line from May 07, at 107.55 now.


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