“¢ Reviving safe-haven demand triggers the initial leg of retracement from 111.00 neighborhood.
“¢ A modest USD retracement from 11-month tops and softer US data adds to the selling pressure.
The USD/JPY pair extended its retracement slide from weekly tops and dropped to fresh session lows in the last hour.
The latest political development in Italy, where in Lega Nord’s Economist and euro-skeptic Alberto Bagnai was appointed Head of the Senate Finance Committee, prompted some safe-haven buying and triggered the initial leg of retracement.
The pair’s fall from an intraday high level of 110.75 accelerated during the early North-American session and was further weighed down by a modest US Dollar retracement from 11-month tops, following the release of mixed US economic data – Philly Fed manufacturing index and initial weekly jobless claims.
Looking at the broader picture, the pair has once again failed ahead of the 111.00 handle but has still managed to hold within previous week’s trading range. Hence, it would be prudent to wait for a decisive break in either direction before determining the pair’s near-term trajectory.
Technical levels to watch
Any subsequent retracement is likely to find support near the very important 200-day SMA, below which the pair is likely to slide back towards 109.80-75 intermediate support en-route mid-109.00s.
On the flip side, the 109.65-70 region might continue to act as an immediate hurdle and is followed by the 110.90-111.00 barrier, which if cleared should lift the pair back towards May monthly highs resistance near the 111.40 area.
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