“¢ A modest USD weakness fails to assist the pair to build on the overnight bounce.
“¢ The ongoing slide in the US bond yields further collaborates towards capping gains.
The USD/JPY pair lacked any firm directional bias and was seen oscillating in a narrow trading band, below the 111.00 handle through the Asian session on Tuesday.
The pair’s overnight attempted bounce from multi-week lows lost steam ahead of the 111.00 handle, with receding demand for traditional safe-havens also doing little to attract any fresh buying on Tuesday.
Despite the latest escalation in the US-China trade tensions, the fact that negotiations will continue this week undermined the Japanese Yen’s relative safe-haven status and extended some support to the major.
Bearish traders further took cues from the ongoing slide in the US Treasury bond yields, which exerted some downward pressure on the US Dollar and collaborated towards capping any meaningful up-move.
It would now be interesting to see if the pair is able to gain traction or the current subdued/range-bound trading action turns out to be a consolidative phase before the next leg of near-term bearish trajectory.
There isn’t any major market-moving economic data due for release on Tuesday and hence, the USD price dynamics/broader market risk sentiment might continue to be key determinants of the pair’s momentum.
Technical outlook
As Omkar Godbole, FXStreet’s own Analyst and Editor writes: “The pair, therefore, looks set to test support at 109.70 (April 25 low) in the short-term. The bearish outlook would be neutralized if the pair closes above the descending 10-day MA, currently at 111.37. That, however, looks unlikely with signs of risk aversion.”
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