07.05 - USD/JPY bounces off the seven-week low
- by George Solotarov
While extending recovery moves from the seven-week-low, USD/JPY takes the bids to 106.25 as Tokyo opens for the first time in a week. The pair’s recent bounce could be attributed to the broad US dollar strength amid trade war fears. Trade rhetoric from US President Donald Trump, coupled with the signs of another step-in the Hong Kong-China affair, seems to weigh on the market’s risk-tone sentiment off-late. Also weighing on the risks could be the White House statement conveying “frustration and disappointment” from trade relations with China.
To portray the risk-off sentiment, US 10-year Treasury yields drop from three-week high to 0.687%, down 2.6 basis points (bps) whereas Japan’s NIKKEI flashes 0.30% loss to 19,530 amid initial trading. A monthly resistance line, currently around 107.15, becomes an important upside barrier for the buyers. On the contrary, a three-week-old falling trend line, at 106.00 now, quickly followed by March 10 top near 105.90, seems to limit the pair’s immediate declines.