USD/JPY under pressure as 2020 kicks in

USD/JPY is consolidating in the start of the New Year yet fragility which remains the bias, despite positive sentiment surrounding trade headlines. At the time of writing the pair is pressured below the 21-hour moving average and is likely offered on a technical outlook. 

Traders are returning following the start of the new 2020 year albeit cautiously so and geopolitics are as crucial as ever. A phase-one deal between the US and China only addresses the easy stuff, and for that reason, we can expect more demand for the yen. 

We have China's agricultural product purchases, tariff rollbacks and some intellectual property pledges in the phase one deal, but that's priced in. This deal will indeed soothe markets and assuage domestic policy concerns in Trump's campaign, but he harder issues are yet to come which favour the yen. 

USD/JPY levels

On  a technical basis, Valeria Bednarik, the Chief Analyst at FXSttreet notes that the USD/JPY pair has reached its December low at 108.39, and is overall bearish:

" It remains below the 108.90 level, a line in the sand for those trying to push the pair further lower. The 4-hour chart shows that the pair is currently below all of its moving averages,  with the 20 SMA heading firmly lower below the 100 SMA, both well above the current level. Technical indicators in the mentioned chart are bouncing modestly within extreme oversold levels, far from indicating an interim bottom."