USD/JPY consolidates just below 200-DMA

• Trade and Brexit keep markets on edge, yen consolidates on lower US dollar and yields. 
• Hong Kong thrown into the mix dampening positive trade deal prospects. 

USD/JPY is currently trading at 108.54 within a range of 108.38/57 in Asia, supported on the 50-day moving average (DMA) with bullish attempts capped by the 200-DMA. Trade wars and Brexit remain the key themes, although there has been a lack of fundamental developments in those respects and markets are moving into a phase of consolidation as investors insist on further catalysts before making a move. 

Investors are on high alert and underpinning the risk-off profile in markets after CNBC reported that Chinese officials require tariffs to be scaled back. The latest developments come with the US Senate which has approved the Hong Kong human rights bill and is sending it to the House of Representatives. 

Brexit TV debate conclusions were mixed in the polls

Elsewhere, Brexit was a focus with the first of a series of Live TV debates hosted by ITV at the start of the Asian session. The debate concluded with mixed polls. A snap ITV Twitter poll put Corbyn in the lead by a huge percentage as follows (there were 29,665 votes):

• 78% Jeremy Corbyn won.
• 22% said Johnson won.

Meanwhile, and to the contrary, a YouGov / Sky News snap chat poll arrived as follows: 

• Johnson 51%
• Corbyn 49%
• Excluding don’t knows
• Just over 1,600 respondents

Indeed, major polls have the Tory party in with a double-digit lead which is supportive of a risk-on climate considering Johnson seems to have a majority of the Tory party backing his deal. 

Meanwhile, the New York Federal Reserve president Williams who said that the economy is in a “good place”. With respect to yields, the US 2-year treasury yields roundtripped between 1.59% to 1.62% while the 10-years initially climbed from 1.80% to 1.83% but were then sent back to 1.78%. 

USD/JPY levels

Valeria Bednarik, the Chief Analyst at FXStreet, notes that the USD/JPY pair consolidates below the 20- and the 200-day SMAs, having hit a daily low of 108.45:

"The technical picture has turned slightly bearish according to the 4-hour chart, with indicators crossing into negative ground although lacking bearish strength. Immediate support is seen at 108.44, 200-period SMA in 4-hour chart, followed by 108.23, last week’s low. However, only a break below 107.70, 100-day SMA, could tilt the longer-term bias to the downside."