USD/JPY: Bulls take pair back above hourly cloud, an area Tokyo traders could get bids behind
|- USD/JPY is currently trading at 109.65, having ranged between 109.14 and 109.77, n the bid as markets take some solace that both the U.S. and China have vowed to continue to talk with meetings planned.
- U.S. yields are recovering, swerving the speculation induced by Twitters go-to place for Chinese commentary on trade wars, The Editor in Chief of the Global Times, Hu Xijin, who tweeted yesterday, "Chinese scholars are discussing the possibility of dumping US Treasuries."
- Set up bullish for Japanese traders to back.
The yen is on the backfoot today as markets find some solace in recent optimistic comments from Trump which followed yesterday's comments from Secretary Mnuchin, who stated that negotiations with China are currently ongoing.
Trump optimism:
Trump also told reporters at the White House, that “we’ll let you know in about three to four weeks whether or not it (talks) was successful…but I have a feeling it’s (talks) going to be very successful”. Subsequently, following the second worst day of the year (behind the January 3rd plunge) for the S&P 500 and DOW, falling -2.41% and -2.38%, respectively, markets have stabilised and the DJIA is up 1.15% at the time of writing. US 10 year yields are +0.66%, despite yesterday's alarms ringing following Twitters go-to place for Chinese commentary on trade wars, The Editor in Chief of the Global Times, Hu Xijin, who tweeted yesterday, "Chinese scholars are discussing the possibility of dumping US Treasuries." The yen has been forced lower as the dollar appreciates and investors shrugged off, for now, prospects of a protracted trade war between the two largest economies.
USD/JPY levels
The Ichimoku cloud is a filter that Japanese traders are renowned to follow and the pair has crossed above the hourly cloud in U.S. trade, something that Japanese traders could well back. Meanwhile, Valeria Bednarik, The Chief Analyst at FXStreet explained that the pair corrected Monday's slump and trades around the weekly opening, with the upside potential seem quite limited:
"In the 4 hours chart, as the pair is currently struggling with a bearish 20 SMA, unable to advance beyond it. The 100 SMA extends its decline below the 200 SMA, both far above the current level. Technical indicators have corrected oversold conditions but were unable to re-enter positive ground, now heading nowhere right below their midlines. The corrective movement could continue up to the 110.00/10 price zone, although gains beyond this last seem unlikely at the time being."
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