USD/JPY bounces off lows, back above mid-109.00s
• Escalating trade tensions prompt fresh safe-haven buying.
• A goodish USD rebound helps limit deeper losses for now.
The USD/JPY pair held on to its weaker tone through the mid-European session and now seems to have moved in a bearish consolidation phase, just above mid-109.00s.
The pair extended Friday's rejection slide from the very important 200-day SMA and came under some fresh selling pressure at the start of a new trading week, primarily on the back of reviving safe-haven demand.
Fears about a full-blown global trade war escalated further after the Wall Street Journal reported that US President Donald Trump has plans to bar many Chinese companies from investing in the US technology firms and block additional technology exports to Beijing.
The followed Trump's tweet on Friday, threatening to impose a 20% tariff on car imports from the EU and marked a fresh escalation in trade tensions between the US and other major economies. Mounting trade war fears dampened global risk appetite was evident from the ongoing slide in the US Treasury bond yields and eventually benefitting the Japanese Yen's safe-haven appeal.
However, a goodish pickup in the greenback demand, with the key US Dollar Index bouncing from the 94.00 neighborhood, helped limit any further losses, at least for the time being, with the pair recovering around 20-25 pips from session lows.
In absence of any major market moving economic releases from the US, broader market risk sentiment and the USD price dynamics might continue to act as key determinants of the pair's momentum through the North-American session on Monday.
Technical levels to watch
Immediate support is pegged near the 109.20 level and is closely followed by the 109.00 handle, below which the pair is likely to accelerate the slide towards 108.65-60 area en-route the 108.15-10 region. On the flip side, momentum beyond the 109.75-area region might confront resistance near the key 110.00 psychological mark and any subsequent up-move is likely to be capped at the very important 200-day SMA barrier near the 110.20 region.