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  • Yen tumbles as Wall Street soars on trade deal optimism.
  • USD/JPY about to test 108.00, at the highest level since October 1.  

The USD/JPY pair jumped toward 108.00 on the back of optimism regarding high-level trade talks between US and Chinese officials. Also, the las latest headlines regarding Brexit contributed to the positive tone around markets.  

Yields and Stocks  

In Wall Street, the DOW JONES is rising 0.80% while the NASDAQ climbs 0.87% as trade talks kicked off in Washington. The Chinese Vice Premier Liu He met with US Trade Representative Lighthizer and Treasury Secretary Mnuchin. So far, no details were made public, but optimism about a potential agreement boosted equity prices.  

US bond yields are rising sharply. The 10-year rose from 1.56% to 1.65%, reaching the highest in more than a week. The move in the bond market and risk appetite weakened the Yen that is among the worst performers. On the opposite, the Pound is rocketing following reports that the UK and the European Union inch closer to a Brexit agreement.

Despite the rally in USD/JPY, the US Dollar is falling across the board, amid an improvement in risk sentiment. Also the Swiss Franc and Gold are lower.  

USD/JPY back above the 20 and 100-day moving average

The pair peaked at 107.97 and then pulled back modestly. As of writing, trades at 107.90, up 45 pips for the day. It climbed back above the 20 and 100-day moving averages that stands around 107.60. A consolidation above 108.00 would point to further gains for the US Dollar.  

The bullish short-term outlook is likely to remain in place as long as it holds on top of 107.40. Above 108.00, the next strong resistance is located at 108.45/50 (September and October highs).