USD/JPY is currently trading at 110.89 at the time of writing, up from 110.74 and having marked its intentions early on in the day; 110.92 traded. The bulls are taking charge as it appears to be a green light for risk at the start of the week with the weekend news that China and the US have managed to avert a trade war, so far. US Treasury Secretary, Mnuchin, announced in a television interview,
“We are putting the trade war on hold. Right now, we have agreed to put the tariffs on hold while we try to execute the framework.”
More on this here: China and U.S. agreed not to engage in a trade war – ANZ
Meanwhile, USD/JPY managed a high of 111.08 last week, (an option barrier defence level), but dropped lower on Friday in a correction of the 17th MAy bid from 110.25. The Yen had picked up a safe haven bid into the last day of trade last week. Investors were eyeing the Italian coalition implications and potentially negative for markets, tracking lower stocks with the S&P down testing the100-D SMA support again and was buoyed by a narrowing of the Japanese/US spread with US yields slipping back. USD/JPY scored 110.84 in late London and fell to 110.65 in early NY trade after a premarket slide in US stocks. NY closed at 110.75 on Friday.
110.85 has been a pivotal level, but the bulls were unable to hold the level into the weekend. However, their intentions are clear at the start of this week so far, but a close above the level over consecutive days is needed put eyes back on the 112.30’s, (Fibos at 112.22/33) 111.50 needs to be broken first as being another potential option barrier. Below the 200-D SMA, (109.92), 109.40/50 guards a run towards and a break below the 108.50 level; This will open risk towards the 50-D SMA before the 2018 low at 104.63 as a key support.