USD/JPY off lows, still in the red below mid-107.00s ahead of Trump

• USD/JPY witnessed some fresh selling on Friday amid worsening US-China relations.
• A broad-based USD weakness further contributed to the pair’s slide to two-week lows.
• Investors look forward to Powell’s speech, Trump’s news conference for a fresh impetus.

The USD/JPY pair now seems to have entered a bearish consolidation phase and was seen oscillating in a range near two-week lows, just above the 107.00 mark.

The pair came under some heavy selling pressure on Friday and finally broke down of a near two-week-old trading range, confirming a stiff resistance near 50-day SMA, or levels just below the 108.00 mark. The downfall was sponsored by a combination of factors, including the prevalent US dollar selling bias and concerns about worsening US-China relations.

The greenback added to the overnight losses and witnessed some follow-through selling on the last trading day of the week. The bearish pressure remained unabated following the release of mostly weaker-than-expected US macro data – Personal Spending data and Core PCE Price Index. On the other hand, worries over a further escalation in diplomatic tensions between the United States and China benefitted the safe-haven Japanese yen. This, in turn, further contributed to the USD/JPY pair's intraday slide to the lowest level since May 18.

Despite the negative factors, the pair managed to find some support near the 107.00 mark and rebounded around 20-25 pips from daily lows. Traders seemed reluctant, rather preferred to wait for a fresh catalyst from the US President Donald Trump's news conference on China's move to effectively suspend the autonomy of Hong Kong.

Apart from this, investors will also take cues from comments by the Fed Chair Jerome Powell, which might influence the USD price dynamics and produce some meaningful trading opportunities later during the US session.

Technical levels to watch

USD/JPY