For another week, the Japanese yen could score another goal versus the greenback which resumed its pressure on the European currencies this week on persisting fear of the Trade tensions negative implications on the global economy.
After failing attempts yesterday to retest 110 area ended to only a lower high at 109.92, USD/JPY extended its slide during today Asian session putting pressure on the exporters of Nikkei 225 which closed down today by 1.63% at 20601.19, following rising of JPY across the broad as a low cost financing currency finds more buyers on unwinding of the carry trades asking for safe haven.
USD/JPY dived today close to 108.80, after new escalating from Trump this time was against Mexico by imposing 5% levy on all the Mexican exports to be 25% later in October, if Mexico did not stop allowing the central American migrants to reach the US border.
Trump's trade punishment came, after failure to build his required wall between the 2 countries on the account of Mexico as he promised the voters to him.
Trump's action told the markets clearly that he will not hesitate to use the US trade relationship as a weapon to punish any countries cause problems.
Trump has seen today that Mexico violated The trade deal USMCA which replaced NAFTA by allowing these migrants to reach the US borders.
Trump's action which will take effect next Jun. 10 was like a lash to the markets which have been already tingling by the fear of the Trade dispute of US especially against China which is looking ready to wider range trade war can include seizing of exporting rare materials to US, beside capping of importing agricultural from US.
China will be in need to finance this war which can last for years eroding the global economic outlook and taking of its holding of US Treasuries.
UST Yields are still under pressure by growing demand of it as a safe haven. Gold could easily capitalize of UST yield slide to be traded at a closer place to $1300 per ounce, while a rare material such as Palladium could creep for trading now close to $1370 per ounce.
UST 10-year yield has extended its slide today to 2.161% which is its lowest level since 2017, while the investors are waiting today for the release of Apr US PCE deflator which is the Fed’s preferred gauge of inflation to show yearly rising by 1.6% as it did in March.
Any comments from the Fed officials will be closely watched by the market pundits who are looking for signals to cutting interest rate on economic slowdown in US.
However the comments which came out recently from the Fed's Governors such as Fed's Vice Chairman Richard Clarida tell that if there is need for easing the Fed will take action but until now There is no concern about the economy which is still running well with the demand for jobs and the rising of the wage pressure which is looking important to the Fed as the PCE.
USD/JPY is now at a lower place below its daily SMA50, its daily SMA100, its daily SMA100 and its daily SMA200, after it formed a lower high yesterday at 109.92 came below its previous peak at 110.67 whereas it failed to maintain a place above its daily SMA100 on May. 21.
USD/JPY is now trading in its sixth consecutive day of being below its daily Parabolic SAR (step 0.02, maximum 0.2) which is reading 110.39.
USDJPY daily RSI-14 is still referring to lower existence inside its neutral territory reading 32.214 close to its oversold area below 30.
USD/JPY daily Stochastic Oscillator (5, 3, 3) which is more sensitive to the volatility is having now its main line inside its neutral region at 29.601 above its signal line which is still lower inside this same area at 27.219, following relatively higher momentum to the downside has been sparked in the recent hours in a try for forming negative crossover inside the neutral area.
Important levels: Daily SMA50 @ 110.78, Daily SMA100 @ 110.58 and Daily SMA200 @ 111.38
Experienced S&R:
S1: 108.48
S2: 107.77
S3: 106.74
R1: 109.92
R2: 110.67
R3: 112.40