- USD/JPY has bounced up slightly from the 50-day average support.
- Positive comments from US and Mexican officials on the USMCA deal likely weighed over Yen.
- The upside is being capped by lingering US-China trade issues.
USD/JPY has bounced up slightly from near 50-day average support at 108.55 and but is struggling to build upside momentum amid mixed trade headlines.
The pair is currently trading at 108.61, having hit a high of 108.68 a few minutes before press time.
The anti-risk Yen ran into offers likely on comments by Mexican official that the United States-Mexico-Canada Agreement (USMCA) is drawing nearer. A US House of Representatives leader also said the deal is close.
However, the newsflow on the US-China trade front has not been so positive this Tuesday morning.
An article by China’s Global Times warned that the downtrend in the Sino-US trade would be difficult to reverse with a “phase one” trade deal.
China on Friday announced a waiver of punitive tariffs on American soybeans and pork. It remains to be seen if the Trump administration responds in kind by delaying the planned tariff hike on $160 billion of Chinese imports, scheduled to take effect Sunday.
With the Sino-US trade tensions still lingering on, the pair is having a tough time building a bullish momentum, despite having defended the 50-day MA.
Further, the lackluster action in the related markets could be limited the upside. The US 10-year yield is flatlined around 1.83%, while the futures on the S&P 500 are reporting a 0.04% loss at press time.
Looking forward, the pair may pick up a strong bid if the equities rise on the better-than-expected China producer price index. The factory-gate inflation dropped 1.4% year-on-year in November, compared to the consensus estimate of -1.5% and up from the previous month’s -1.6%.
Technical levels
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