USD/JPY Current Price: 109.41
- The US and China will roll back tariffs in phases if a deal is reached.
- Japan’s preliminary September Leading Economic Index foreseen at 91.7 from 91.9.
- USD/JPY heading toward the critical 110.00 level, bulls backed by sentiment.
Prevalent risk appetite sent the USD/JPY pair to 109.48, its highest since late May. The pair rallied on the back of news indicating that the US and China are planning to roll back tariffs in phases, once a deal is reached. Representatives from both economies confirmed so, sending US equities to all-time highs even before the opening. Wall Street closed with substantial gains, while government debt yields soared, with that for the 10-year Treasury note hitting 1.97% amid resurgent demand for high-yielding assets.
The Japanese macroeconomic calendar will be quite busy this Friday, as the country will release September Labour Cash Earnings and Overall Household Spending. Later, it will publish the preliminary estimates for the September Leading Economic Index and the Coincident Index for the same month.
USD/JPY short-term technical outlook
The USD/JPY pair is consolidating gains above 109.30, short-term bullish despite losing upward momentum. In the 4 hours chart, the pair is firmly above all of its moving averages, with the 20 SMA heading sharply higher above the larger ones. Technical indicators, in the meantime, remain near daily highs, with the RSI still close to overbought levels, although retreating alongside the price. Nevertheless, the risk is skewed to the upside, with room to extend gains toward the critical 110.00 figure.
Support levels: 109.30 109.00 108.65
Resistance levels: 109.60 110.00 110.40
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