USD/JPY has cracked yesterday and early today's 109.46 lows and is threatening a bearish weekly close amid lingering trade war angst and increasing concerns about the health of the U.S. economy.
Prices are nearing a holiday truncated week's completion below the weekly cloud base at 109.55 and close to the 38.2% retracement of the post-flash-crash 104.10-112.40 rebound at 110.23, as well as the weekly kijun at 109.07 that's close to May's 109.02 low.
A close below that cluster of support would likely be accompanied by fresh equities and Treasury yield drops, emblematic of distrust in the U.S. and China quickly resolving trade and structural disputes or for the Fed to ease swiftly enough to avert further safe haven trading weighing on USD/JPY.
If USD/JPY ends May below April's 110.66 low, it will confirm the same bearish, monthly candlestick signal that began the tumble to January's low .
Miserable U.S. PMI data yesterday and today's core durable goods miss that is yanking Q2 GDP estimates lower dim the prospects for U.S. yields and USD/JPY rises without some good news on trade.
A sub-109 close would likely squeeze out most of the remaining IMM yen spec shorts with a fall to 108.50 next.
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