“¢ A modest USD retracement from 17-month tops prompts some additional long-unwinding.
“¢ Fading safe-haven demand weigh on JPY and seemed to help limit further sharp downfall.
“¢ Investors now look forward to the US macroeconomic data for some fresh directional impetus.
The USD/JPY pair extended overnight retracement slide from three-week tops and kept losing ground for the second consecutive session on Thursday.
With investors looking past Wednesday’s upbeat ADP report, the US Dollar struggled to preserve previous session’s strong gains to near 17-month tops and was seen as one of the key factors prompting some follow-through long-unwinding trade through the Asian session.
Bearish traders also seemed to track a mildly softer tone around the US Treasury bond yields, though the prevalent risk-on mood, as depicted by strong gains across equity markets, undermined the Japanese Yen’s safe-haven status and helped limit deeper losses, at least for the time being.
Moving ahead, market participants now look forward to the release of ISM manufacturing PMI for some fresh impetus later during the early North-American session.
This coupled with a slew of important market moving US macroeconomic releases scheduled at the start of a new month, including the keenly watched monthly jobs report (NFP), will play an important role in determining the pair’s next leg of directional move.
In the meantime, the USD price dynamics and the broader market risk-sentiment might continue to act as key determinants of the pair’s momentum through the European trading session.
Technical levels to watch
A follow-through selling below 112.65 horizontal zone is likely to accelerate the fall towards 112.25-20 support area en-route the 112.00 handle. On the flip side, the 113.00-113.05 region now seems to act as an immediate resistance, above which the pair is likely to surpass the 113.35-40 supply zone and aim towards reclaiming the 114.00 handle.
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