USD/JPY refreshes session low, focus remains on Powell’s testimony

   “¢   Dismal US housing starts data further dents already weaker sentiment around the USD.
   “¢   The prevalent risk-off mood/declining US bond yields further add to the selling pressure.
   “¢   Focus remains on the Fed Chair’s Jerome Powell’s semiannual testimony before the Congress.

The USD/JPY pair quickly retreated around 20-pips and refreshed session lows, around the 110.70-65 region in a knee-jerk reaction to the dismal US housing market data.

The US Census Bureau reported the shutdown-delayed housing starts figures for December, which crashed 11.2% m/m – marking its biggest drop in 8 years, albeit building permits managed to register a modest 0.3% m/m gain.  

The data triggered a fresh leg of downfall in the US Treasury bond yields, which exerted some downward pressure on the already weaker US Dollar and prompted some fresh selling around the major.

This coupled with the prevalent risk-off mood, despite the latest optimism over US-China trade negotiations, was seen underpinning the Japanese Yen’s safe-haven demand and further collaborated to the pair’s offered tone.

With today’s slide, the pair has now erased all of the previous session’s goodish gains to fresh YTD tops, with bulls now looking forward to the Fed Chair Jerome Powell’s semiannual testimony for some immediate respite.

Today’s US economic docket also highlights the release of Conference Board’s consumer confidence index for the month of February but is more likely to be overshadowed by the key event risk.

Technical outlook

 Valeria Bednarik, FXStreet’s own American Chief Analyst writes: “Despite the positive momentum faded, the pair is far from bearish according to technical readings in the 4 hours chart, as the pair continues developing above bullish 100 and 200 SMA, while the price hovers around a directionless 20 SMA. Technical indicators in the mentioned chart eased from their highs but turned flat when they reached their mid-lines a sign that selling interest is limited.”