USD/JPY off lows, but struggles to get back above 105.00 handle

   •  US-Chinese trade issues prompt some aggressive selling on Friday.
   •  Global risk aversion trade underpins JPY’s safe-haven demand.
   •  US durable goods orders unlikely to lend any meaningful support.

The USD/JPY pair managed to recover around 30-pips from near 17-month lows but was now seen struggling to sustain above the key 105.00 psychological mark. 

The US Dollar sold-off across the board after the US President Donald Trump signed a presidential memorandum to launch long-promised anti-China tariffs and subsequent Chinese retaliation. China announced plans for reciprocal tariffs on $3 billion of imports from the US and fueled worries of a full-blown trade war between world's two largest economies. 

Trade war fears triggered a global risk aversion trade, as depicted by the ongoing slump across equity markets. and falling US Treasury bond yields, which was seen underpinning the Japanese Yen's safe-haven demand and collaborated to the pair's early fall to its lowest level since Nov. 2016.

The USD selling pressure now seems to have abated a bit and helped limit further downside, only for the time being. The modest rebound, however, lacked any conviction/follow-through, which now seems to suggest that the bearish fall might still be far from over.

On the economic data front, the key release of US durable goods orders would now be looked upon for some immediate respite for the USD bulls but is unlikely to act as a major game changer. 

Technical outlook

Yohay Elam, Analyst at FXStreet writes: “The new low of ¥104.63 is the next line of support. Below, the next lines are from late 2016. ¥103.12 and ¥102.10 are next.”

“On the upside, the recent lows turn into resistance: ¥105.25 and ¥105.55. Higher above, the weekly high at ¥106.60 is next,” he adds further.