USD/JPY records its 10th day of declines as safe-haven buying buoys the Yen

Summary:

The USD/YEN price continued on its relentless march lower as an up-tick in Global Covid-19 cases attracted buying to the relative safety of the Japanese currency.

The USD/JPY price continued on its relentless march lower as an up-tick in Global Covid-19 cases attracted buying to the relative safety of the Japanese currency.

The month of March saw the US Dollar gain considerable ground against its Japanese counterpart, sending the USD/JPY rate to its highest level in a year. The market stopped short of touching 111.000, with the popular currency pair recording an intraday high of 110.966, which marked the top of the recent cycle.

Since the market peak last month, the reversal in fortunes has been extreme. In the 17 trading days following, the US Dollar has managed a positive close against the Yen in only 3 sessions. The USD/JPY price has now closed below the previous day’s settlement for the 10th consecutive time. This marks the longest losing streak since August 2011 and a 2.8% decline from the March 31st, 2020 highs.

Having been the worst-performing G10 currency since the start of this year, this recent rise in the Japanese Yen has earned it the title of the best performer over the last week.

Much of this recent strength can be attributed to safe-haven buying as the growing rate of Global Covid-19 infections spook investors. The Japanese currency is often seen as a secure store of value in times of economic uncertainty. The Dollar also turned sharply low Friday adding to the downside pressure on the trading pair.

USD/JPY technical outlook

The recent spike in the Yen sent the rate below the 32.8% Fibonacci retracement at 107.810. This level had proven good support over the prior two trading sessions.

On the break of this important marker, prices slid to an intra-day low of 107.48. This sell-off tagged 107.47 and the ascending trendline at 107.50, in place since the 6th January 2021.

The USD/JPY rate eventually reclaimed the Fibo retracement by the close of play to finish the day at 107.87.

Technical support remains at the lower end of the ascending trendline at 107.500 with resistance at 108.14. This represents the high of Friday’s session and the upper end of the descending channel in place from the 110.96 highs.