“¢ Reviving safe-haven demand keeps exerting downward pressure.
“¢ Resurgent USD demand does little to stall the ongoing downfall.
The USD/JPY pair quickly reversed an early European session spike to 111.75 area and refreshed session lows in the last hour.
The pair extended overnight retracement slide from levels beyond the 112.00 handle and has failed to find any respite from resurgent US Dollar demand. The greenback remained supported by the August Fed monetary policy statement, which reaffirmed a gradual rate hike path but was largely offset by global flight to safety.
Escalating US-China trade tensions triggered a fresh wave of global risk aversion trade, evident from the current sell-off across European equity markets, and boosted demand for the Japanese Yen’s safe-haven demand.
Currently hovering around mid-111.00s, the pair has now moved within striking distance of the post-FOMC swing low, which if broken is likely to pave the way for an extension of the downfall amid relatively thin US economic docket.
Despite the ongoing slide, the pair remains comfortably above near three-week lows, set last week. Hence, it would be prudent to wait for a follow-through selling below the mentioned support before positioning for any further near-term downfall.
Technical levels to watch
Immediate support is pegged near the 111.25-20 region and is closely followed by the 111.00 handle, below which the pair is likely to accelerate the fall towards 110.70-65 support area. On the flip side, the 111.80-90 region now seems to act as an immediate hurdle, which if cleared should assist the pair to aim towards its next hurdle near the 112.55-60 supply zone.