Japan data to be out early Wednesday expect to give further signs of poor economic health. Wall Street sharp decline, triggered by US-EU tensions, fueled demand for the safe-haven yen.
1. Technical Overview
The pair turned short-term bearish but managed to bounce from the 38.2% retracement of its latest bullish run, measured between 109.70 and 111.81 at around 111.00, which means that a break below 110.90 is required to confirm additional slides ahead. In the 4 hours chart, the 100 SMA converges with the mentioned daily low, further supporting the case of a downward extension on a break lower. In the same chart, the 20 SMA gains bearish strength around 111.50, while technical indicators stabilized near daily lows within negative levels, also skewing the risk to the downside.
2. Fundamental Overview
The USD/JPY pair fell to 110.97, its lowest since April 1st, dragged lower by Wall Street’s slump and persistent dollar’s weakness. Equities traders didn’t take well Trump’s decision to impose up to $11B tariffs on European products, with the DJIA opening the day roughly 200 pips below Monday’s close, later bouncing modestly with the USD/JPY pair following the lead. Meanwhile, US Treasury yields edged modestly lower with the yield for the benchmark 10-year note down to 2.49%. Japan didn’t release macroeconomic data at the beginning of the day, but this Wednesday will offer February Machinery Orders, expected to post a yearly decline of 5.2%, Domestic Corporate Goods Price Index, seen up in March by 1.1% YoY, and March preliminary Machine Tool Orders, which posted a whopping 29.3% decline in the previous month. BOJ’s Governor Kuroda will offer a speech later in the session, although he is not expected to make relevant announcements.