The Japanese Yen dropped in Asia, while other majors remained flat to positive against the greenback despite the continued rise in the treasury yields. The market action suggests the risk assets could trade on the front foot in Europe. The argument has merit as the AUD/JPY pair, which is widely considered as a risk barometer, rose to 83.40 in Asia – the highest level since April 19. It seems the markets have taken heart from the reports stating that China has offered to cut its annual trade surplus with the US by $200 billion. It is worth noting that 10-year treasury yield rose to 3.128 percent in Asia – the highest level since July 2011. Still, as noted above, the dollar failed to score against most majors, which indicates the overbought conditions as shown by the 14-day relative strength index (RSI) are coming into play. Thus, oversold pairs like EUR/USD, GBP/USD could correct higher. The JPY crosses may post stellar gains as equities are likely to cheer easing US-China trade tensions. Further, European desks may also offer Yen in response to dismal Japanese core inflation reading. Moreover, the data have reinforced expectations that BOJ is miles away from beginning the policy normalization process. The good news for Yen bears does not end here. The rising treasury yields could put upward pressure on the Japanese government bond (JGB) yields and thus BOJ may have to buy more bonds (Yen bearish) in order to keep the 10-year JGB yield at zero percent. What’s brewing in the majors? EUR/USD: Corrective rally likely The RSI has diverged in the EUR positive manner. Further, the RSI has shown oversold conditions since May 2. So, an uptick cannot be ruled out, but will likely be short-lived as the yield differential is rising in the EUR-negative manner and the 5-day moving average (MA) and the 10-day MA is biased bearish. GBP/USD: 200-day MA is a magnet The pair could have a relook at the 200-day MA located at 1.3558 as the RSI shows oversold conditions and bullish divergence. However, only a close above 1.3618 would confirm a short-term bottom. Brexit related news flow will likely guide the pair ahead of the next week’s inflation figures. USD/JPY: 14-day RSI enters the overbought zone As discussed above, the fundamentals offer little hope for the Yen bulls. However, the RSI on the USD/JPY daily chart has moved well above 70.00, indicating overbought conditions. So, the pair may have a tough time clearing the resistance at 111.32 (76.4 percent Fibonacci retracement of Jan-Mar drop). Major news China bowing down to Trump’s demand of a $200 billion cut in China’s U.S. trade surplus Japan’s core CPI slowed in April for a second straight month US fund investors hike stock exposure by most since March – Lipper US’ Lighthizer: NAFTA talks “going nowhere” – Reuters China local govt firm fails to repay $629 mln loans in rare default: sources – Reuters News Macron and Merkel want an ‘unlimited’ exemption from Trump’s steel tariffs No Brexit deal scenario is a “serious possibility” – Irish PM News No BAFTA’s for NAFTA play writers today, and here’s why China / U.S. launch ‘part deux’ of trade talks to avert tariff war FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next USD/JPY eases from tops, faces some resistance near 111.00 mark FX Street 5 years The Japanese Yen dropped in Asia, while other majors remained flat to positive against the greenback despite the continued rise in the treasury yields. The market action suggests the risk assets could trade on the front foot in Europe. The argument has merit as the AUD/JPY pair, which is widely considered as a risk barometer, rose to 83.40 in Asia - the highest level since April 19. It seems the markets have taken heart from the reports stating that China has offered to cut its annual trade surplus with the US by $200 billion. It is worth noting that 10-year… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk.4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk.5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.