USDJPY has been trading mostly on the defensive this week, with the dollar struggles to regain the upside momentum as risk sentiment remains unstable amid the contradictory signals. The pair registered one-week lows around 107.50 yesterday and remains below 108.00 in a muted trading on Thursday.
The Japanese yen derives support from lingering worries about the slowing global growth despite the major central banks have softened their tone, signaling their readiness to prop up the economy. Also, the declining US Treasury yields, the threat of fresh US tariffs on European goods, as well as doubts in the US-Chinese trade settlement add to the appeal of the safe-haven yen.
Moreover, the downside pressure on the pair could intensify by the end of the week should tomorrow’s US jobs report disappoint. Weak numbers will inevitably fuel expectations of a rate cut by the Fed, which will hurt the greenback across the board. In this scenario, USDJPY will extend the slide with the initial target at 107.00 after derailing the 107.50 support.