Friday, May 10, 2019

USD/JPY - 10 May 2019


Fundamental Highlights

The Yen pushed higher during yesterday’s session as the probability of a US-China trade deal is getting slimmer. The broad US Dollar weakness couldn’t help boost the pair either. While trade talks have been extended until today, the planned US Tariff hike on Chinese goods from 10% to 25% took effect earlier in the Asian session. If both sides again fail to reach a deal today, then Beijing may respond with its own set of tariff hikes, leading to further escalation of the trade war and increased demand for safe-haven currencies like the Yen.

Technical Analysis

The Dollar/Yen fell towards 109.50 yesterday but managed to closed just above a key support level 109.70. Price could consolidate between 110 and 109.70 for a period of time until a break to either side. The market sentiment is bearish thus traders will be more appealed to the anti-risk Yen. A break above 110 could extend the pullback towards 110.30 before continuing its downward trend. However, a break below the 109.50-70 area (February lows) could accelerate further weakness on this pair.

Support: 109.70 / 109.50 / 109.15
Resistance: 110.10 / 110.30

Chart (H4)