USD/JPY on the defensive around mid-107.00s, below 50-DMA

Worsening US-China relations benefitted the safe-haven JPY and exerted some pressure on USD/JPY.
A pickup in the USD demand, the positive mood around the equity markets helped limit deeper losses.
Traders await a sustained breakthrough one-week-old trading range before placing directional bets.

Haresh Menghani FXStreet

The USD/JPY pair extended its sideways consolidative price action on Wednesday and remained confined in a narrow trading band around mid-107.00s.

The pair continued with its struggle to make it through the key 50-day SMA pivotal resistance and witnessed a modest pullback on Tuesday amid worsening US-China relations. Diplomatic tensions between the world's two largest economies escalated further after the US President Donald Trump promised a strong reaction to China's planned national security law for Hong Kong.

China was quick to retaliate and threatened countermeasures against any the US. This, in turn, provided a modest lift to the Japanese yen's perceived safe-haven status and kept the USD/JPY pair on the defensive for the second straight session on Wednesday. However, a goodish pickup in the US dollar demand helped limit any deeper losses, at least for the time being.

The greenback was back in demand on Wednesday, which coupled with some follow-through gains in the equity markets extended some support and held the pair well within a one-week-old trading range. The risk sentiment remained well supported by the latest optimism over a potential COVID-19 vaccine and hopes of a sharp V-shaped recover for the global economy. Hence, it will be prudent to wait for a sustained breakthrough in either direction before positioning for the pair's near-term trajectory amid absent relevant market moving economic releases.

Technical levels to watch

USD/JPY

Overview
Today last price	107.51
Today Daily Change	-0.04
Today Daily Change %	-0.04
Today daily open	107.55

Trends
Daily SMA20	107.12
Daily SMA50	107.93
Daily SMA100	108.41
Daily SMA200	108.33

Levels
Previous Daily High	107.92
Previous Daily Low	107.4
Previous Weekly High	108.09
Previous Weekly Low	107.04
Previous Monthly High	109.38
Previous Monthly Low	106.36
Daily Fibonacci 38.2%	107.6
Daily Fibonacci 61.8%	107.72
Daily Pivot Point S1	107.33
Daily Pivot Point S2	107.11
Daily Pivot Point S3	106.81
Daily Pivot Point R1	107.85
Daily Pivot Point R2	108.15
Daily Pivot Point R3	108.37

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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