- The USD / JPY fell slightly from the two-month highs above 109.00.
- The worsening US-Chinese relations benefited the JPY refuge and exerted some pressure.
- The post-ECB strength around the euro weighed on the USD and added to the sales bias.
USD / JPY extended its regular intraday withdrawal close to its two-month highs and refreshed its daily lows around the region of 108.60 in the past hour.
The pair did not take advantage of its early rally, has rather struggled to find acceptance above the 109.00 bar and experienced a modest decline from the highest level since April 7. The worsening US-Chinese relations have forced investors to take refuge in safe havens. and benefited the Japanese yen, which turned out to be a key factor exerting some pressure on the USD / JPY pair.
Tensions between the two largest economies in the world have deepened further after the United States suspended passenger flights to and from the country by Chinese airlines as of June 16. This came in response to the dragon nation’s earlier decision to prevent US carriers from entering China and kept a lid on recent optimism about a strong global V-shaped economic recovery after the coronavirus pandemic.
On the other hand, the strong post-ECB purchases around the shared currency caused aggressive sales in US dollars at the start of the North American session. A further weakness in the USD contributed to the intraday decline of the USD / JPY pair by more than 50 pips. Despite the fall, the pair has always managed to stay above the very important 200-day SMA and, therefore, deserves some caution for bearish traders.
On the economic side, the initial number of weekly jobless claims in the United States amounted to 1.877 million for the week ending May 30. This figure was slightly higher than consensus estimates pointing to 1.8 million and did not impress USD bulls much.
Going forward, market players are now beginning to reposition themselves for the release of the monthly US employment report on Friday. The closely watched NFP report will now play a key role in influencing the short-term price dynamics of the USD and give new directional momentum to the major USD / JPY.