USD/JPY trades with modest losses, manages to hold above 106.00 handle for now
- Bulls failed to capitalize on the overnight solid rebound from fresh multi-month lows.
- Escalating US-China trade tensions continue to benefit the JPY’s safe-haven status.
The USD/JPY pair edged lower on Thursday and gave up a part of its overnight goodish bounce from fresh multi-month lows, albeit has managed to hold its neck above the 106.00 handle.
The overnight solid rebound in the US equity markets weighed on the Japanese Yen's safe-haven status and prompted some aggressive intraday short-covering move around the major. This coupled with a modest rebound in the US Treasury bond yields extended some support to the US Dollar and further collaborated to the pair's late recovery on Wednesday.
US-China trade war fears continue to weigh
Despite a strong follow-through uptick in the US bond yields, the pair failed to capitalize on the up-move and witnessed some fresh selling after the People’s Bank of China (PBOC) on Thursday set the official reference rate for the Chinese currency at the weakest level since 2008 - above the closely-watched 7.0 barrier against the USD.
The move did little to ease market concerns over a full-blown US-China trade war and its impact on the global economic growth, which might continue to underpin the Japanese Yen's perceived safe-haven demand and keep a lid on any meaningful recovery amid absent relevant market-moving economic releases on Thursday.
Technical levels to watch