“¢ A follow-through USD weakness prompts some fresh selling.
“¢ Traders shrug off weaker Japanese industrial production data.
“¢ JPY further benefits from reviving safe-haven demand.
The USD/JPY pair held on to its offered tone through the early European session and is currently placed at the lower end of its daily trading range, around the 108.60-65 region.
The pair struggled to build on overnight rebound, led by receding anxiety over the political situation in Italy and came under some renewed selling pressure on Thursday. Traders shrugged off weaker-than-expected Japanese industrial production data, with a combination of negative factors exerting fresh downward pressure on the major.
The US Dollar extended its sharp retracement slide from 6-1/2 month tops and has failed to gain any respite from a modest uptick in the US Treasury bond yields. Meanwhile, renewed US-China trade tensions hampered risk sentiment, evident from a mildly softer opening across European equity markets, and boosted the Japanese Yen’s safe-haven demand, which eventually prompted some selling around the major.
Today’s second-tier US economic data – personal income/spending data, core PCE price index, the usual initial weekly jobless claims and Chicago PMI, is unlikely to act as a major game changer but might still be looked upon to grab some short-term trading opportunities.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet writes: “A bearish reversal confirmation would open the doors to a deeper sell-off to 105.00 – 104.63 (March low).”
“A break above 110.00 would save the day for the dollar bulls. That said, a convincing move above the long-term descending trendline hurdle (currently seen at 111.44) would signal a resumption of the rally from the March low of 104.63,” he added further.
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