“¢ Chinese economic slowdown concerns exert some downward pressure.
“¢ A follow-through pickup in US bond yields/risk-on mood limit downside.
The USD/JPY pair traded with a mild negative bias at the start of a new trading week and eroded a part of Friday’s goodish up-move to monthly tops.
The pair failed to capitalize on last week’s positive momentum to the 110.00 neighborhood and also shrugged off growing optimism over US-China trade talks, with bears taking cues from the latest data that showed the world’s second-biggest economy slowing further in the last quarter of 2018.
Despite the softer data, the prevailing risk-on mood was seen denting the Japanese Yen’s safe-haven status, which coupled with a follow-through pickup in the US Treasury bond yields, though did little to provide any meaningful boost to the US Dollar and seemed to be the only factor that helped limit deeper losses.
In fact, the yield on the benchmark 10-year government bond stood at a three-week high level of 2.788% but did little to assist the US Dollar to build on the recent up-move to near two-week tops and pushed the pair further below the key 110.00 psychological mark.
Meanwhile, absent relevant market moving economic releases, amid a bank holiday in the US, leaves the pair at the mercy of broader market risk sentiment and the USD price dynamics ahead of this week’s key event risk – the latest BoJ monetary policy update on Wednesday.
Technical levels to watch
Any subsequent slide now seems to find some support near the 109.20 region, below which the pair is likely to break through the 109.00 handle and test the 108.75-70 horizontal support. On the flip side, the 109.80 area, closely followed by the 110.00 mark might continue to act as an immediate resistance, which if cleared should lift the pair further towards testing the 110.30 supply zone.
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