The US dollar is recovering after touching a 3-week bottom early this week. European currencies are on the back foot, while the Japanese yen has been sliding for the second day in a row. The US dollar-to-yen exchange rate touched an 8-week low and break the sacramental 111.00 handle. Specifically, the pair managed to come closer to the 111.30 area.
Prices are on the rise driven by the recovery of demand for the greenback and lower risk aversion. Specifically, the trade war issue is no longer an urgent one, and the global markets express careful optimism, which pushes risk assets up putting pressure on the yen being usually a safe haven.
This morning, the yen faced extra pressure from the reports about car and equipment orders in Japan. According to the preliminary estimate, the increase slowed down in June to 11.4% (14.9% earlier).
The US dollar-to-yen exchange rate has touched the psychological level of 111.00. In the near term, the greenback can be bolstered by persisting increase of 10Y state bond yield. In particular, the Treasuries change hands near 2.87%.
At the same time, the US dollar-to-yen rate shows a more restrained upward potential, in the long run, taking into account that the trade wars or if any other risks boost demand for the Japanese currency. With such scenario, the players will take profit under long dollar positions at good prices.