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  • USD/JPY has been testing the upside towards the 112 handle and topped out at 111.88.
  • USD/JPY currently trades at 111.85, up from a low of 111.72.  
  • Ichimoku Cloud offering support on an hourly basis with daily and 4hr components aligned bullishly.  
  • The price is climbing through the 4hr Tenken-sen to the upside and supported by daily Tenken-sen.  

USD/JPY was solid despite the sell-off on Wall Street overnight, as investors ponder as to whether a trade deal between the Chinese and US  can realistically be salvaged this month.

Robert Lighthizer very cautious in his rhetoric last week, proclaiming that there is still a lot of work to do, including trying to resolve how structural reforms that China needs to adhere could be enforced. “If we can complete this effort – and again I say IF … we might be able to have an agreement that helps us turn the corner in our economic relationship with China,” Lighthizer said in testimony to the U.S. House Ways and Means Committee last week – in stark contrast to yesterday’s upbeat WSJ weekend article.  

  • Wall Street closed in a sea of red / DJIA bears look to break 78.6% Fibo confluence support

Meanwhile, USD/CNH is bid up on the news that China has softened its growth projection for 2019 from 6.5% to 6-6.5%. This is giving the dollar a boost across the board and supporting the upside in USD/JPY.  

USD/JPY levels

The Ichimoku Cloud is favouring a break of the 112 handle with the price supported on the 1hr cloud support and breaking up through the Tenken-sen baseline. The 4hr Tenken is being tested by the price as well with all other conditions met for a buy:

  • Price must close above the Cloud.
  • Cloud ahead must be bullish.
  • Conversion Line (Tenken-sen) is greater than the baseline.
  • Lagging Span is greater than or crosses above the cloud.  

On a break of 112, there are good prospects for a continuation which would bring the Lagging Span on the daily chart through the cloud and point towards a sustained rally on the new handle towards the 78.6% Fibo retracement target of 112.55.