Technical Analysis

USD/JPY holds lower on softer risk sentiment, what levels to watch out for today?

The yen stays firm on weaker Treasury yields and equities


And the overall softer risk sentiment helped to drive the pair to a low of 109.60 earlier on but price is hovering between 109.70-80 currently, with sellers testing the daily support from the March low @ 109.71 once again.

That and light bids around 109.50 will be key levels for sellers to break below in chasing a further downside move lower today. The lows last week reached around 109.47-48 but ultimately failed to produce a firm break of the March low as noted above.

However, break below those levels and we could see a bit of a slippery slope to the downside for the pair so just be wary of that.

As it stands, US-China trade talks aren’t really progressing at the much needed pace to keep markets optimistic and Trump’s tweets about any deal potentially only coming in his second term goes to show how far apart the two countries are in reaching a compromise.

The next thing to look out for will be China’s communique on the matter. I reckon if anything else, it wouldn’t paint a pretty picture but I also reckon markets are already expecting that based on price action to start the day.

Besides that, just be wary of more details about the coming retaliation by China towards the latest round of US tariffs increase. That could give risk assets a nudge or two lower and also push USD/JPY down further.

On the flip side, for buyers, they need to find a break above the 110.00 handle first before getting any sense of control to drive price higher. The 100-hour moving average sits at 109.99 currently so that and offers at the figure level should keep any upside momentum in-check so long as risk sentiment continues to stay softer.

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