USD/JPY refreshes 6-week lows on N. Korea headlines

The USD/JPY pair continues to push lower in the last session of the week amid escalating geopolitical tensions in Asia. Having refreshed its lowest level since mid-June at 110.56, the pair is now trading at 110.60, losing 0.58%, or 65 pips, on the day.

Earlier in the session, Kyodo News Agency reported that North Korea tested another ICBM (intercontinental ballistic missile) that landed in Japan's exclusive economic zone.after flying around 45 minutes. Citing missile expert David Wright, a co-director of the Global Security Program at the U.S.-based Union of Concerned Scientists, BNO news said, "the data suggests that the missile would be capable of reaching Los Angeles, Denver, and Chicago if flown at a standard trajectory, and possibly Boston and New York City." Moreover, according to CBS News, U.S. Joint Chiefs Chairman Dunford called South Korean counterpart and discussed military response options following the incident.

• North Korea reportedly fires a missile - Kyodo
• Japan: North Korean missile could be another ICBM

Although the trading volume is thinning out as we approach the end of the week, fresh developments on this issue could force investors to seek refuge in safe-havens like the JPY and continue to weigh on the pair. 

In the meantime, the US Dollar Index, which failed to make a meaningful recovery in the session, is at 93.17, looking to close the third straight week with losses.

• US Dollar Index consolidates losses, headed to lowest weekly close in 14 months

Technical outlook

On the downside, 110 (psychological level) could be seen as the first critical support ahead of 109.60 (Jun. 12 low) and 108.95 (Jun. 14 low). On the upside, resistances align at 111 (psychological level), 111.40 (100-DMA) and 112.35 (20-DMA).