- The Yen is among the strongest G10 currency as it is fuelled by safe-haven flows in relation to the Italian political turmoil.
- USD/JPY is trading at 4-week low below the 109.00 handle reflecting the risk-off mode across markets.
The USD/JPY currency pair is continuing its slide on Tuesday as the pair has lost about 300 pips since May 21. It is trading at around 108.60 down 0.74% on Tuesday’s trading.
Italian politics is sending markets worldwide into panic mode. The Italian President, Sergio Matarella refused to appoint Paolo Savona as Finance Minister and as a result, the Five Star movement and the League said they abandoned their coalition project.
In fact, Carlo Cottarelli, a former official at the International Monetary Fund (IMF) has been appointed as an interim prime minister and it has been reported that he intends to give up his mandate to pave the for a potential election on July, 29, according to Reuters.
Meanwhile, the 10-year Treasury yield has tanked almost 10% since last week which is usually highly beneficial for the Japanese currency.
The positive news from North Korea, which is willing to meet with the US, has been largely overshadowed by the trans-alpine political situation.
USD/JPY 4-hour chart
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“A sustained recovery back above the 109.00 handle could lift the pair back towards 109.35-40 resistance before the momentum further gets extended towards the 109.80-85 supply zone. On the flip side, weakness back below mid-108.00s might turn the pair vulnerable to slide further below the 108.00 handle and test 107.75-70 support area,” wrote FXStreet own Haresh Menghani.
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