USD/JPY dips below 110, looks south on escalating US-China trade war

Escalating US-China trade war has put a strong bid under anti-risk JPY.
USD/JPY dipped below 110.00, bearish continuation pattern seen in 4-hour chart.

Omkar Godbole FXStreet Contributor

The USD/JPY fell to an eight-day low of 109.85 in Asia, possibly due to fast-moving US-China trade war and the signs of risk aversion in the financial markets.

The JPY picked up a strong bid in early Asia, pushing the USD/JPY below its 200-day MA of 110.22 after Trump asked US Treasury asked the US Treasury to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent.

On Friday, the US announced tariffs on $50 billion worth of Chinese imports. In response, China slapped a 25 percent tariff on 545 American imports.

Clearly, world's two-biggest economies appear increasingly headed towards a long, griding trade war.

Hence, the risk assets are under pressure. For instance, the S&P 500 futures are down 0.76 percent. Consequently, the anti-risk JPY is on the offensive.

As of writing, the USD/JPY is trading at 108.90 and looks set to extend losses further.

USD/JPY 4-hour chart shows a bearish continuation pattern

The bear flag breakdown indicates the sell-off from the recent high of 111.40 has resumed and the pair could revisit 108.13 in a week or two.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD accelerates losses, focus is on 1.1800

EUR/USD’s selling pressure is gathering pace now, opening the door to a potential test of the key 1.1800 region sooner rather than later. The pair’s pullback comes on the back of marked gains in the US Dollar following US data releases and the publication of the FOMC Minutes later in the day.

GBP/USD turns negative near 1.3540

GBP/USD reverses its initial upside momentum and is now adding to previous declines, revisiting at the same time the 1.3540 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold battle to regain $5,000 continues

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and challenging two-day highs just above the key $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Fed Minutes to shed light on January hold decision amid hawkish rate outlook

The Minutes of the Fed’s January 27-28 monetary policy meeting will be published today. Details of discussions on the decision to leave the policy rate unchanged will be scrutinized by investors.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.