- The US-China trade war truce weighed heavily on the Japanese Yen’s safe-haven status and helped the pair to open with a weekly bullish gap on Monday.
- The pair has now found acceptance above an important confluence region – comprising of 20-day SMA and 23.6% Fibo. level of the 112.40-106.78 downfall.
A subsequent break through a two-month-old descending trend-channel – extending from yearly tops set on April 24, sets the stage for an extension of the recent recovery move from last week’s near six-month lows.
Meanwhile, oscillators on the daily chart have recovered from the bearish territory but pointed to slightly overbought conditions on hourly charts and seemed to hold investors from placing any fresh bullish bets.
However, given the positive trade-related development, the set-up might have already shifted in favour of bullish traders and support prospects for dip-buying that might help limit any meaningful intraday downtick.
The pair might now aim to test the 108.70-75 supply zone – nearing 38.2% Fibo. level, above which the momentum could further get extended beyond the 109.00 handle towards the next major hurdle near the 109.35-40 region.
USD/JPY daily chart
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