- Escalating tensions between China and the U.S. weighs on sentiment on Wednesday.
- US Dollar Index clings to modest gains above 97.
- Coming up: ADP employment change and trade balance data from the U.S.
After staying under pressure during the Asian session, the USD/JPY pair recovered above the 113 but failed to preserve its momentum and dropped back into the negative territory ahead of macroeconomic data releases from the United States. As of writing, the pair was trading at 112.80, losing 0.35% on a daily basis.
Earlier today, reports of Chinese tech-giant Huawei's CFO, who got arrested in Canada, getting extradited to the U.S. to face charges of violating Iran sanctions caused concerns amid escalating political tensions between the U.S. and China just when two countries agreed to a ceasefire on trade war for 90 days. Major European equity indexes suffered heavy losses to reflect the risk-off mood with Germany's DAX and the UK's FTSE both losing more than 2% on the day.
In the early NA session, the ADP is going to publish its private sector employment report, which is expected to show an increase of 195K in November. Moreover, trade balance, third-quarter unit labour costs & nonfarm productivity data will be looked upon for fresh impetus. Ahead of the data, the US Dollar Index was up 0.1% at 97.10. Investors will be paying a close attention to Wall Street as well.
Technical levels to consider
The pair could face the first resistance at 113.60 (Dec. 4 high) ahead of 114 (Nov. 28 high) and 114.20 (Nov. 12 high). On the downside, supports are located at 112.60 (daily low), 112.35 (100-DMA) and 112 (psychological level).
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