USD/JPY: bulls battle back to 109.50 and back above key 109.27 Kijun

USD/JPY has been in thin ice overnight with a US session close below the 109.27 Kijun. Currently, as Tokyo opens, USD/JPY is trading at 109.47 and has made a high of 109.50.

• Funda-FX wrap: Trump's letter to Kim cancelling the what would have been historic summit

USD/JPY was in a recovery attempt in Asia yesterday, but the trade war and political angst got the better of the bulls who can't deny the case for the downside on a short-term outlook at least.  Recalling that Trump has been considering tariffs on auto imports, the pair lost 109.75-109.10 in London and 108.96 traded on the back of a letter that Trump wrote to N.Korea cancelling the, what would have been, historic meeting between the nations in Singapore next month. 

The early Asian press today carried the feelings of disappointments of the North Korean delegates of the proposed summit who have highlighted to the US that Trump's letter of cancellation is not in line with the world's wishes and they are willing to talk to Trump's administration at any time - 'cooling some fears of a nuclear war', ("You talk about your nuclear abilities, but ours are so massive and powerful that I prey to God hat they will never have to be used," - Trump wrote in the letter).

Key events ahead

Locally, the Tokyo CPI was just released, missing at 0.4% y/y vs the expected 0.5% and previous 0.5%. For the day ahead, the US comes with Durable goods orders, (likely declined 1.2% m-o-m (Consensus: -1.3%) - analysts at Nomura predict, driven by weaker orders of new transportation equipment) and University of Michigan consumer sentiment that is expected to remain elevated.

• Key US data previews - Nomura

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that the 4 hours chart shows that the current recovery is corrective after the pair touched its 200 SMA:

"...but remains below the daily ascendant trend line coming from early April, finally broken early Asia, while the 100 SMA gains downward traction, now converging with the trend-line around 109.90. In the mentioned chart, technical indicators are bouncing modestly from oversold readings, but remain into the red and without enough strength to support additional gains ahead."