- Sliding US bond yields weigh on the USD amid impending Fed rate cut later this July.
- US-China trade tensions underpin JPY’s safe-haven demand and add to the selling bias.
The USD/JPY pair witnessed some follow-through weakness for the second consecutive session on Thursday and dropped to over two-week lows, around the 107.60 region in the last hour.
After an attempted bounce on Tuesday, the pair came under some renewed bearish pressure and extended last week’s rejection slide from the 109.00 round figure mark amid the ongoing US Dollar pullback from one-week tops.
Rising odds of aggressive easing by the Fed at the end of a two-day meeting on July 30-31 triggered a fresh leg of a sharp downfall in the US Treasury bond yields, which eventually exerted some fresh pressure on the greenback.
This coupled with the lack of progress in the US-China trade talks weighed on investors’ appetite for riskier assets – as depicted by a weaker tone around equity markets and underpinned the Japanese Yen’s safe-haven demand.
The pair has now dropped back closer to monthly lows support, around mid-107.00s, which if broken will set the stage for a further near-term depreciating move back towards challenging multi-month lows set on June 25.
Thursday’s US economic docket – featuring the release of Philly Fed manufacturing index and the usual initial weekly jobless claims, will now be looked upon for a fresh impetus later during the early North-American session.
Technical levels to watch
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