“¢ Trump’s USD-bearish comments prompted some aggressive selling on Thursday.
“¢ The USD bulls remained on the defensive and kept exerting some pressure.
“¢ Risk-on mood weighed on JPY’s safe-haven appeal and helped limit deeper losses.
The USD/JPY pair traded with a mild negative bias on Friday, albeit has managed to hold above one-week lows touched in the previous session.
The US President Donald Trump’s overnight comments triggered a broad-based US Dollar sell-0ff and prompted some aggressive long unwinding trade around the major. Trump expressed displeasure about the Fed’s monetary tightening and also raised concerns about the recent USD strength.
The pair witnessed a sharp intraday retracement of over 100-pips from a six-month high level of 113.18 but found some support near the 112.00 handle and finally managed to end the day near mid-112.00s.
The greenback remained on the back-foot through the Asian session on Friday and did little to assist the pair to build on overnight rebound. However, the prevalent risk-on mood, as depicted by positive trading sentiment around equity markets weighed on the Japanese Yen’s safe-haven appeal and helped limit further downside.
Meanwhile, the market had a rather muted reaction to Japanese economic data, showing that the national core CPI ticked higher to 0.8% in June and all industry activity index for May came in slightly better than expected at 0.1%.
In absence of any major market moving economic releases from the US, the USD price dynamics and the broader market risk sentiment will play an important role in influencing the pair’s momentum on the last trading day of the week.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet explains: “USD/JPY is seen falling to ascending trendline support, currently located at 111.07, in the next few days. A close below the rising trendline would signal the rally from the March low of 104.63 has ended and could yield a deeper drop to levels below 110.00.”
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