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  • USD/JPY fails to recovery beyond 21-DMA as trade/political pessimism favor JPY.
  • The US markets’ off and downbeat Nikkei Manufacturing PMI triggered an early-day pullback.

USD/JPY seems to lose upside momentum even if it takes the bids to 106.22 before the European open on Monday.

Trade tension between the US and China continues to loom as China is taking diplomatic steps to avoid a further trade war but the Trump administration isn’t in a mood to have a good talk with the dragon nation when they meet, probably, for a trade negotiation some time during this month.

On the economic front, Japan’s August month Nikkei Manufacturing Purchasing Managers’ Index (PMI) slipped below 49.5 prior to 49.3.

Geopolitical tension is also gaining the grip as Russia recently warned the US of breaking ceasefire while attacking Syria’s Idlib whereas the UK is considering to send drones to the Gulf amid tension with Iran. Further, protests in Hong Kong escalate with China signaling military invention but will first discuss present scenarios during Tuesday’s conference.

The US Dollar (USD) remains firm as markets have recently been seeking safe-haven in the greenback amid dovish rhetoric from the rest of the world.

With the US markets off for the Labor Day Holiday, coupled with no major data left for publishing from Japan, investors will keep an eye over trade/political headlines for fresh impulse.

Technical Analysis

A daily closing beyond 21-day simple moving average (DMA), near 106.20, needs to cross a month-old falling trend-line, at 106.65, in order to aim for 107.00, if not then 105.60 and 105.00 can come back on the chart.