- A combination of factors triggered some aggressive selling around USD / JPY on Tuesday.
- Falling US bond yields put heavy pressure on the USD and put some pressure on it.
- A softer risk tone supported the safe-haven JPY and contributed to the intraday slide.
The pair USD/JPY it continued to lose ground during the middle of the European session and fell to fresh two-week lows around the 104.55 region in the last hour.
The pair witnessed a strong sell on Tuesday and extended last week’s retracement slide from nearly three-month highs around the 105.75 region, or levels just above the very important 200-day SMA. The USD / JPY pair has now erased its gains recorded the previous week and was pressured by a combination of factors.
Investors became wary amid doubts about a relatively faster US economic recovery following the release of a rather unimpressive US jobs report on Friday. This, coupled with a pullback in US Treasury yields, led to widespread weakness in the US dollar and was seen as a key factor putting pressure on the USD / JPY pair.
Bearish traders were also inspired by a slightly softer tone in equity markets, which tends to prop up demand for the Japanese yen as a safe haven. In addition to this, the chances of some trading stops being triggered below the key psychological mark of 105.00 compounded the downward pressure and contributed to the continued decline of the USD / JPY pair.
In the absence of major economic releases to move the US market, US bond yields will play a key role in influencing USD price dynamics and provide some momentum. Investors will also keep a close eye on overall market risk sentiment to seize some significant trading opportunities around the USD / JPY pair.
Technical levels
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