USD/JPY heads back into 105.00 as China lashes out in trade wars

Fresh activity in the USD/JPY as Japanese inflation, China trade tensions, and White House turnover jostle traders' attention spans.
Friday is geared to be a sentiment-heavy affair with thin showings on the macro calendar.

Joshua Gibson FXStreet

The USD/JPY is reversing in the early Asia trading session, pushing into 105.00 after reaching a low of 104.63.

The Asia session is gearing up to be a roiling affair, with the Japanese National Consumer Price Index coming out at 1.5%, a little under the expected 1.7%, but still slightly better than the previous 1.4% showing for the inflation indicator. A positive note to the macro figures is bolstering some USD-bidding against the Yen on reaction.

China prepares to swing back

Further adding to the action is developments on the global political stage, with China showing they're not afraid to go toe-to-toe with the US in a tariff-based trade war, and the Chinese are preparing a raft of duties on US goods targeting key exportation industries in the US economy. Further tempering the USD's ability to defend itself is Trump's announcement of the replacing of H.R. McMaster as his national security advisor by John Bolton, a hawkish personality that has been wagging Trump's ear on foreign policy recently. Turnover within Trump's White House has been a tumultuous affair, with Bolton marking Trump's third national security advisor since taking office and following Rex Tillerson's recent unceremonious dumping as Secretary of State.

With nothing else on the data docket for the Yen this week, the Asia session is going to be dominated by traders reacting to China's retaliatory statements about trade tariffs and the revolving door that is the Trump administration.

USD/JPY levels to watch

Traders are going to be cautious moving forward, and the USD is going to have a hard time retaking recent losses against the Yen in today's session. Support is currently standing at today's fresh low of 104.63, a fourteen-month low for the pair, and the Dollar is finding itself fighting up a fast-flowing stream, with resistance at yesterday's wing low of 105.25 and yesterday's high of 106.00.

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

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