USD/JPY faces stiff resistance once again near 109.80, focus on trade

Having reversed most of Monday’s slide, the USD/JPY pair faced rejection once again near the 109.80 region, now consolidating a shade lower near 109.70 amid improved risk sentiment.

Asia witnessed a major turnaround in the risk sentiment after the US President Trump’s conciliatory remarks, citing that he feels the US-China trade talks will be successful. The improved risk tone extended into the Europe markets, despite mixed macro news from the Euroland and Germany, as conciliatory comments from the Chinese Foreign Ministry also helped keep the sentiment buoyed.

Further, the spot closely tracked the rebound in the S&P 500 futures, with the gauge now rallying +0.65% and flirting with daily tops of 2,825.62. Meanwhile, positive Treasury yields amid risk-recovery also aided the USD/JPY recovery from three-month lows of 109.03 reached after risk-aversion intensified on China’s announcement of the retaliatory tariffs on USD 60 billion worth of the US imports.

The spot has now entered a phase of consolidation over the last hour, as the bulls digest the comments by Fed’s Williams and await the sentiment on the Wall Street and further trade-related headlines for a sustained recovery above the 109.80 level and beyond. The US docket has no relevant economic data slated for release and hence, the broader market sentiment will remain the main market motor.  

USD/JPY Technical Levels