- Reviving safe-haven demand underpins JPY and exerts some pressure.
- Renewed weakness in the US bond yields further weighed on the USD.
- The downside remains limited amid tempered Fed rate cut expectations.
The USD/JPY pair failed to capitalize on the previous session's goodish up-move and edged lower on Wednesday, albeit has managed to hold above the 108.00 handle.
The pair caught some bids on Tuesday following the release of upbeat US retail sales data for June, which tempered expectations of aggressive policy easing by the Fed and provided a goodish lift to the US Dollar.
However, a slight deterioration in the global risk sentiment - amid resurfacing US-China trade tensions, underpinned the Japanese Yen's perceived safe-haven demand and turned out to be one of the key factors capping gains.
In the latest trade-related development, the US President Donald Trump said that the US could impose tariffs on an additional $325 billion worth of Chinese goods, if needed, and dented investors' appetite for riskier assets.
The flight to safety was evident from some renewed weakness in the US Treasury bond yields, which further inspired bearish traders and exerted some downward pressure through the Asian session on Wednesday.
Meanwhile, the downtick seemed limited, at least for the time being, as investors continue to scale back possibilities of 50bps rate cut by the Fed at its upcoming monetary policy meeting, scheduled on July 30-31.
Moving ahead, market participants now look forward to the US housing market data - building permits and housing starts, due later during the early North-American session for some short-term trading impetus.
Technical levels to watch
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