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  • USD/JPY is currently trading at 109.69 between a range of 109.47 and 109.71 on the bid.
  • Risk off markets overnight kicked into early Asia, but yen on backfoot in Tokyo.  
  • USD/JPY is correcting 23.6% of Wall Street’s slide.

USD/JPY has managed to climb about 23.6% of Wall Street’s slide in the last Asian trading session this week with USD/JPY currently trading at  109.69 at the time of writing, moving up between a range of 109.47 and 109.71 on the bid.  

Asia equity markets on the back foot – Nikkei 225 (-1.0%)

Markets overnight were risk-off following deepening sentiment for a prolonged trade spat between the US and China as U.S. and Chinese officials exchanged insults over Huawei and trade in general.  The mood sent the yen higher, rallying across the board and up from 110.60’s to over a big figure higher to the 109.40s vs the greenback.  

Risk off sends US yields lower aiding yen’s rise

“The US 10yr treasury yield fell from 2.38% to 2.29% (the lowest since Oct 2017), steadying at 2.32%. The 2yr T-note yield slipped from 2.21% to 2.12% then to 2.14%. The chance of a Fed rate cut by December, implied by Fed fund futures, rose from 100% to 130%,”

analysts at Westpac explained.

As for U.S. data, that too  weighed on the greenback and the USD/JPY pair.  Firstly, the Manufacturing PMI fell  2 points  to 50.6 which was the  lowest level  since 2009 while  US Services PMI fell 2.1pts to 50.9, a three-year low. US new home sales lost  -6.9% in April while US jobless claims offered some solace for the greenback,  coming at  211k last week.  

 USD/JPY levels

Valeria Bednarik, the Chief Analyst  at FXStreet, explained that the  USD/JPY  pair trades a couple of pips above the daily low ahead of the Asian opening, having declined below the 61.8% retracement of the latest bullish run measured between 109.01 and the 110.66 high at 109.65, the immediate resistance.

In the 4 hours  chart, the price is far below its 20 and 100 SMA, both converging around 110.20, the Momentum indicator maintaining a strong bearish slope and the RSI trying to stabilize around 34, all of which keeps the risk skewed to the downside for the upcoming sessions.