Concerns about trade and currency wars are forcing deleveraging and repatriation flows into the yen, the premier carry and risk-trade currency, leaving USD/JPY eyeing the pivotal 105 support level for Japanese corporations and speculators.
Yen haven buying increased overnight on a report the U.S. is delaying licenses to sell to Huawei nFWN2541NH, further USD/CNY gains and Trump's ongoing pressure on the Fed and calls for a weaker USD .
Weak EZ and UK data, plus Brexit and Italian fears nL8N25527K are feeding into derisking.
In contrast, Japan's Q2 GDP beat forecast , keeping expectations low for the BOJ joining the Fed and other central banks in meaningful easing.
Japan's GDP is likely being bolstered by spending increases to avoid October's tax hike and on 2020 Olympics preparations.
Soft U.S. core PPI nLLA9JEF18 and weak Canada jobs data nAQN012NXF reinforce the global slowdown and Fed easing view, keeping Wednesday's 105.50 low in play.
A break would trigger sell stops and a test of massive 105 option expiries defending that crucial support for Japanese corporates nL4N2541DG and specs.
2018 and 2019 lows and the long-term head-and-shoulders top's neckline at 104.10-56 would then be in play, with 100 figure support and 2016's 99 low the next targets.