USD/JPY consolidates recent gains to near 3-month tops, around 109.00 handle
|- US-China trade optimism continued weighing on the JPY’s safe-haven status.
- Bulls took some breather near the very important 200-day SMA resistance.
- The focus shifts to FOMC decision on Wednesday and Thursday’s BoJ meeting.
The USD/JPY pair now seems to have entered a bullish consolidation phase and was seen oscillating in a narrow trading band around the 109.00 handle, or near three-month tops set earlier this Tuesday.
The safe-haven Japanese Yen remained on the defensive amid signs of easing US-China trade tensions and assisted the pair to gain some follow-through traction during the Asian session on Tuesday. The US President Donald Trump's overnight comments, saying that they are “ahead of schedule” on finalizing phase one of the trade agreement with China, provided a goodish lift to the global risk sentiment.
Bulls seemed reluctant ahead of FOMC/BoJ
This comes on the back of last week's comments from the US Trade Representative (USTR) office that they are close to reaching phase one deal and hope to sign a deal in mid-November. The USTR on Monday further added to the recent optimism and said that it is studying whether to extend tariff suspensions on $34B of Chinese imports, which is due to expire on December 28 this year.
Meanwhile, bulls took some breather near the very important 200-day SMA, rather refrained from placing fresh bets ahead of the upcoming event risk – the highly anticipated FOMC meeting. The Fed is scheduled to announce its decision during the US session on Wednesday and will be followed the latest BoJ monetary policy update on Thursday, which should help determine the pair's next leg of a directional move.
Technical levels to watch
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