USD/JPY: Bulls cheer US-China trade hopes near two-week high

• USD/JPY follows a daily closing beyond 200-day SMA for the first time since November 08.
• US-China nears phase-one deal, doubts over phase-two prevails.
• A heavy economic calendar, frequent trade headlines will keep investors busy.

While extending its recent run-up to multi-day high, USD/JPY takes the bids to 109.10 during Wednesday’s Asian session.

The pair closed beyond 200-day Simple Moving Average (SMA) for the first time since early November as the market’s risk sentiment improved further. The reason is increasing hopes that the United States (US) and China will soon sign an initial, or phase-one, trade deal.

The recent trade headlines came in the form of US President Donald Trump’s comments that he is near the final stages of the trade deal with China and it has got to be good. On the contrary, the South China Morning Post’s (SCMP) story highlights the Commerce Secretary’s order to protect telecommunication networks and their supply chains from national security threats. Though, the same fails to get much notice.

Additionally, Goldman Sachs recently came out recommending a buy on the Chinese Yuan (CNH) while expecting the US tariff rollback.

Elsewhere, the JPMorgan came out with an upbeat analysis while expecting a global rebound in 2020.

As a result, the US 10-year treasury yields stay around 1.75% while the S&P 500 Futures taking rounds to 3,144. It’s worth mentioning that Wall Street remains strong amid overall trade positive sentiment.

Fedspeak praises positives…

Also contributing to the pair’s strength were upbeat comments from the Federal Reserve (Fed) Chairman Jerome Powell and Governor Lael Brainard. The Fed Chair Powell praised the current economic status and the present monetary policy while Governor Brainard said that risks to economic outlook remain to the downside but  sentiment  appears to be improving. Traders mostly ignored downbeat statements from the President of the Federal Reserve bank of Dallas, Robert Kaplan, that the US economy has a good chance to expand by 2% next year but the growth in the fourth quarter is going to be weak.

Moving on, the Second version of the third quarter (Q3) US Gross Domestic Product (GDP) and October month Durable Goods Orders will decorate the US economic calendar. Ahead of that comments from the Bank of Japan (BOJ) board member Makoto Sakurai and trade headlines can be followed for intermediate direction.

Technical Analysis

Bulls now await a clear break above monthly high nearing 109.50 to aim for 110.00 and May 21 high near 110.70. In a case where prices slip below a 200-day SMA level of 108.90, the recent low near 108.30 will be in focus.