- Trade optimism continues to weigh on the JPY’s safe-haven status and remained supportive.
- A subdued USD price action fails to provide any bullish impetus, rather capped further gains.
The USD/JPY pair failed to capitalize on its early uptick and has now retreated around 20-pips from over one-month tops set earlier during the Asian session on Tuesday.
The pair added to overnight positive move and continued gaining traction for the second consecutive session on Tuesday amid the recent optimism over the resumption of the US-China trade talks, which continued weighing on the Japanese Yen’s perceived safe-haven status.
Weaker USD partly offset US-China trade optimism
In the latest trade-related development, the US President Donald Trump on Monday confirmed that the US will be talking to China next week, while the US Treasury Secretary Steven Mnuchin told Fox television that there had been a lot of progress on the US-China trade deal and that the US is prepared to negotiate.
This coupled with some follow-through technical buying beyond last week’s swing high – around the 107.20-25 region – further collaborated to the pair’s early uptick to the highest level since early-August, albeit a subdued US Dollar price action failed to impress the bulls or provide a fresh impetus.
Despite a strong follow-through up-move in the US Treasury bond yields, the greenback failed to attract any meaningful buying interest and seemed to be the only factor capping gains amid firming expectations of further monetary easing by the Fed at its upcoming meeting on September 17-18.
Hence, it will be prudent to wait for a strong follow-through buying before traders start positioning for an extension of the recent positive momentum from multi-year lows, amid absent relevant market-moving US economic releases on Tuesday.
Technical levels to watch
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