USD/JPY: Sellers dominate as geopolitical concerns, upbeat data weigh on trade optimism

• Libyan crisis joins upbeat data to trigger the USD/JPY pullback at the week-start.
• Second-tier data and risk events could keep directing near-term moves.

Having trimmed nearly 40-pips from its intra-day high, the USD/JPY pair struggles around 111.40 during early Monday. The pair recently dropped as upbeat data from Japan and Geopolitical tension at Libya pushed traders to shift their attention off the trade optimism that propelled prices to a three-week high on Friday.

At the start of the week, Japan’s current account and trade balance data surpassed forecast and prior, which in turn offered an initial short-covering to the Japanese Yen (JPY). Adding to the sentiment was the International Monetary Fund’s (IMF) Global Financial Stability Report (GFSR) that signaled downside risks to key economies like the US, Canada, Australia and China.

Furthermore, a news report that the US Secretary of State Mike Pompeo urged Libyan National Army to stop its offensive on Tripoli highlighted the latest geopolitical tensions in Libya.

The US 10-year Treasury notes recently weakened to 2.492% from 2.5%.

The USD/JPY pair has gained nearly 200+ pips in a fortnight’s time as the US and China are constantly flashing positive signs of trade accord that has threatened the global economy during 2018. It should also be noted that Friday’s upbeat employment report from the US was an additional fuel to the price rally.

Looking forward, Japan’s economy watcher survey and consumer confidence index for March, followed by the February month figure for the US factory orders are likely upcoming data that can entertain short-term traders.

Market consensus suggests that the economy watchers survey could soften to 46.7 from 47.5 if looking at the current conditions whereas outlook index may improve to 49.3 from 48.9. Consumer confidence could also rise to 42.3 from 41.5 whereas the US factory orders might drop -0.6% from +0.1% earlier.

USD/JPY Technical Analysis

Break of 200-day simple moving average (SMA) may push the USD/JPY further down towards 100-day SMA level of 111.00 whereas 110.30 and 109.80 could please the bears then after.

On the upside, 111.85, March month high of 112.15 and December 2018 lows near 112.30 can entertain buyers during further upside.