- USD/JPY has backed off from session highs despite trade optimism
- China will be reducing tariffs on some US goods from Jan. 1.
- Pair’s repeated failure to beat key MA resistance has boosted pullback risks.
USD/JPY is currently trading at 109.42, having hit a high of 109.54 two hours ago.
The pair has backed off from session highs despite the news that China will be lowering import tariffs on 850 US items starting from Jan. 1, 2020.
The list will also include frozen pork and frozen avocado, the finance ministry said while adding further that tariffs will be lowered on some technology products from July 1, 2020.
So far, the news has failed to have a notable impact on the risk assets. For instance, the futures on the S&P 500 are currently up just 0.08%. As a result, anti-risk JPY is showing resilience.
Focus on 100-week MA
The pair has failed to close above the 100-week average for three straight weeks despite the US-China trade truce and record highs in the US equities.
So, it seems safe to say that the pair’s rally from the August low of 104.45 has run out of steam. The repeated failure to beat the average resistance has shifted risk in favor of a pullback to support at 107.89 (Nov. 1 low).
A weekly close above the key average at 109.59 is needed to revive the bullish view.
Weekly chart
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Trend: Bearish
Technical levels
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