The Trump administration has launched an investigation into car imports that could result in new US tariffs. Against this backdrop, the risk aversion has intensified and therefore fueled demand for safe haven assets. The Japanese yen is the main beneficiary in such environment, with the USD/JPY pair has slipped from multi-month highs at 111.40, down to ten-day lows around 109.30.
Global stock markets turned negative amid a tighter trade rhetoric from Washington, including the lingering doubt on US-North Korea summit. As long as riskier assets remain in the red, the yen will continue to appreciate, despite the overall bullish trend in the greenback.
However, as the Fed continues to tighten, and the economic fundamentals remain solid, the dollar will stay on the offensive in the longer term. As such, the ongoing downside correction is seen as a buying opportunity with the prospects for another attack of the 111.00 threshold. In the short term, the pair will likely remain under pressure, though the buck looks attractive already around 109.00.