• US political jitters/trade-war fears continue to weigh on the USD.
• A modest rebound in equities help limit deeper losses.
• Had a rather muted reaction to mixed US housing market data.
The USD/JPY pair remained heavily offered tone through the early European session but has managed to recover few pips from session lows touched in the last hour.
The recent US political jitters, along with growing concerns over a potential global trade war, kept exerting downward pressure on the US Dollar and turned out to be one of the key factors weighing on the major.
However, a modest rebound across European bourses, and indications of a mildly positive opening in the US equity markets dented the Japanese Yen's safe-haven appeal and assisted the pair to bounce off lows.
Meanwhile, today's mixed US housing market data did little to influence the pair's momentum, albeit helped limit deeper losses, at least for the time being. A lower-than-expected fall in building permits was largely negated by a steeper drop in housing starts and hence, failed to provide any meaningful impetus.
Today's US economic docket also features the release of industrial production data and Prelim UoM Consumer Sentiment, but again seems to pass unnoticed, with broader market risk sentiment and the US political development acting as key determinants of the pair's momentum on the last trading day of the week.
Technical outlook
Valeria Bednarik, American Chief Analyst at FXStreet writes: “The pair is bearish according to technical readings in the 4 hours chart, as it continues trading below its 100 and 200 SMAs, while the Momentum indicator resumes its decline within negative territory, reaching fresh monthly lows. The RSI indicator in the mentioned chart is stable around 35, with no certain directional strength. The immediate support is the 105.24 level, February low, with a break below the level exposing the 104.60 region for the upcoming US session.”
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