“¢ Geopolitical tensions underpin JPY’s safe-haven demand and prompted fresh selling.
“¢ Traders further took cues from sliding US bond yields amid subdued USD demand.
“¢ The focus now shifts to the Fed Chair Jerome Powell’s testimony before Congress.
The USD/JPY pair now seems to have entered a consolidation phase and was seen oscillating in a narrow trading band near the lower end of its daily trading range, around the 110.80 region.
The pair failed to capitalize on the overnight goodish up-move to 111.25 area, or fresh YTD tops and met with some fresh supply on Tuesday in wake of geopolitical tensions in the Asian peninsula.
Reports of Indian airstrike in targets in Pakistan partly offset the latest optimism over the US-China trade negotiations and triggered some risk-aversion trade during the Asian session on Tuesday.
The risk-off mood was evident from the ongoing slide in the US Treasury bond yields, which underpinned the Japanese Yen’s relative safe-haven demand and was seen exerting some fresh downward pressure on the major.
Meanwhile, a subdued US Dollar price action did little to lend any support or influence the price action as the focus now shifts to the Fed Chair Jerome Powell’s semiannual testimony before Congress later today.
This coupled with the advance US GDP growth figures on Thursday will influence the near-term sentiment surrounding the USD price dynamics and provide some meaningful directional impetus.
Technical levels to watch
The 110.60-50 region might continue to protect the immediate downside, which if broken might accelerate the slide towards 110.20 intermediate support en-route the key 110.00 psychological mark. On the flip side, the 111.00 handle might continue to act as an immediate key hurdle, above which the pair is likely to make a fresh attempt towards testing 100-day SMA near the 111.50 region.
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