USD/JPY slides back closer to post-FOMC swing low, around mid-111.00s

   “¢   Reviving safe-haven demand underpins JPY and prompts some selling.
   “¢   Bulls seemed unimpressed by the latest FOMC monetary policy update.  

The USD/JPY pair extended overnight retracement slide from 1-1/2 week tops and is now inching back closer to the post-FOMC swing low.  

The US-China trade war concerns reemerged after Trump administration proposed a higher 25% tariffs on $200 billion of Chinese imports, as against 10% initially proposed and triggered a fresh wave of global risk-aversion trade.  

The global flight to safety, evident from a weaker trading sentiment around equity markets, boosted the Japanese Yen’s safe-haven appeal and was seen as one of the key factors dragging the pair lower for the second consecutive session.

Meanwhile, bullish traders seemed little impressed by a follow-through US Dollar uptick, supported by the August Fed monetary policy statement that reaffirmed gradual rate hike path, and the BoJ Deputy Governor Amamiya‘s comments that it has become difficult to hit 2% inflation by fiscal 2020.

In absence of any major market moving economic releases, the broader market risk sentiment might continue to act as a key determinant of the pair’s momentum ahead of Friday’s keenly watched US monthly jobs report (NFP).

Technical levels to watch

A follow-through selling below 111.50-40 area might turn the pair vulnerable to head back towards retesting sub-111.00 level before eventually dropping to 110.70-65 support zone. On the upside, the 111.80-85 area, closely followed by the 112.00 handle might now act as an immediate resistance, above which the pair seems all set to test its next resistance near the 112.50 region.