USD/JPY retreats to 108.50 amid waning risk appetite

• Yen recovers as cautious tone seeps into markets, focus shifts to the Brexit vote.  
• But bulls could fight back control amid a broad-based rebound in the US dollar.

The USD/JPY pair moved away from multi-day tops reached 108.75 and retreated to the 108.50 level, as the bulls took a breather and await the Brexit outcome for the next push higher.

The renewed weakness in the spot can be attributed to waning appetite for the risk assets, fuelled by the Chinese stimulus signals and RRR cut, as the Brexit vote anxiety gripped the European markets and boosted the demand for the risk assets such as the Yen.

Although it is confirmed that the UK PM May’s Brexit deal is likely to face a hysterical defeat by the Parliament later tonight, markets prefer to trade cautiously, unwilling to be caught on the other side of the trade. The European indices trimmed gains and reverted to the lower bound of today’s trading range.

However, the USD/JPY retreat appears limited, helped by a resurgence of the US dollar demand across the board, as nervous markets look for safety in the US currency. The USD index jumped from 95.48 to 95.90 highs, up +0.25% on the day.

Looking ahead, the pair will continue to remain at the mercy of the risk sentiment amid a lack of fresh fundamental releases while the FOMC member George’s speech could offer some fresh trading impetus.

USD/JPY Technical Levels