Monday, July 1, 2019

USD/JPY - 01 July 2019

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Fundamental Highlights

The Dollar/Yen gapped above 108 in today’s Asian session after Trump and Xi agreed to restart US-China trade talks over the weekend. Also, Trump visited North Korea, to meet Kim Jong-un, both countries agreed to set up teams to resume stalled nuclear talks. While the market appears in a risk-on mood, traders shouldn’t be overly optimistic as there are many barriers to cross still. For instance, the US is still keeping the 25% tariff imposed on $250 billion in Chinese goods in place. Regarding the North Korea stunt, market participants should remember that Trump is heading into his reelection campaign, so it’s all too little convenient timing wise to continue the ‘stalled’ nuclear talks. Meanwhile, the main focus will be back to the Fed’s policy decision. While an interest rate cut is fully priced, there is still the risk for U.S. data to really disappoint in the build-up to the event and this week's Nonfarm Payrolls will be critical.

Technical Analysis

The Dollar/Yen gapped up above 108.20 on Monday morning as the bulls have 108.70 – 109 at their sight. The bears will throw everything they have got at those crucial levels in order to stay in complete control. However, if the bulls manage to break above that strong resistance area, we could possibly witness a bullish trend reversal on this pair.

Support: 108.2 / 107.85
Resistance: 108.70 / 109

Chart (H4)
USDJPY