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USD/JPY bulls struggling to defend 108.00 mark

  • Positive US-China trade developments continue to lend support.
  • Bulls lacked conviction amid firming Fed rate cut expectations.
  • Traders eye US retail sales data for some short-term impetus.

The USD/JPY pair reversed an early uptick to fresh multi-week tops and is currently placed at the lower end of its daily trading range, around the 108.00 handle.
The pair built on the overnight solid intraday up-move of around 60-pips and a subsequent closer above the 108.00 handle, albeit continued with its struggle to find acceptance/extend the momentum further beyond the 100-day SMA barrier.
It is worth mentioning that the pair on Thursday witnessed a sharp intraday pullback to mid-107.00s in reaction the US President Donald Trump’s latest accusation that the Fed is not doing enough to support the US economy.

US-China trade optimism continues to underpin

However, a further improvement in the global risk sentiment, supported by encouraging signs that the United States and China were narrowing their differences over trade, continued attracting some meaningful dip-buying interest.
In the latest trade-related development, the WSJ reported on Thursday that China was seeking to narrow the scope for upcoming trade negotiations in early October, hoping to resolve some key issues and break the deadlock.
Adding to this, a Bloomberg news – citing people familiar with the matter – reported that the Trump administration officials are considering to offer a limited trade agreement to China that would delay and even roll back some US tariffs.
Despite supporting factors, the pair lacked any strong bullish conviction amid firming market expectations that the Fed will ease monetary policy further and cut interest rates at its upcoming meeting next week – September 17-18.
In the meantime, Friday’s US economic docket – highlighting the release of monthly retail sales data – will be looked upon for some short-term trading opportunities later during the early North-American session.

Technical levels to watch


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