USD/JPY slides further below mid-107.00s amid weaker risk sentiment

• USD/JPY once again failed near 50-day SMA hurdle amid reviving safe-haven demand.
• Escalating US-China tensions weighed on investors’ sentiment and benefitted the JPY.
• The intraday slide seemed rather unaffected by a modest pickup in the USD demand.

The USD/JPY pair edged lower through the Asian session on Friday and was last seen trading near the lower end of its daily range, just below mid-107.00s.

The pair continued with its struggle to decisively break through the 50-day SMA barrier near the 107.85-90 region and came under some fresh selling pressure on the last trading day of the week. Concerns about worsening US-China relations took its toll on the global risk sentiment. This, in turn, benefitted the Japanese yen’s (JPY) safe-haven status and exerted some pressure on the USD/JPY pair.

Diplomatic tensions between the world’s two largest economies escalated further after Zhang Yesui, speaker for the National People’s Congress (NPC), said on Thursday that China will firmly defend its interests if the US does things that undermine China’s core interests. Adding to this, China’s decision to impose new Hong Kong security law further fueled concerns about a major US-China tussle.

The JPY was further underpinned by the Bank of Japan decided to leave its monetary policy unchanged during the unscheduled meeting held this Friday. The Japanese central bank announced targeted loans for small and mid-sized firms to combat the negative impact from the coronavirus pandemic.

With reviving safe-haven demand turning out to be an exclusive driver of the pair’s downfall on Friday, bulls seemed rather unimpressed by some renewed US dollar buying interest.

the short-term interest rate or the Japanese Government Bond (JGB) yield target while announcing 75 trillion loans to combat the coronavirus (COVID-19). The USD/JPY pair has now dropped to the lower end of a multi-day-old trading range and a subsequent slide below the 107.30 will set the stage for a further intraday depreciating move amid absent relevant market moving economic releases from the US.

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