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  • USD/JPY is lower as Trump turns the screw on geopolitical risks, speaking at a rally in Florida and bringing up China and Venezuela.  
  • USD/JPY is currently trading at 109.91 but made a fresh low of 109.83, lowest since 25. March, down from an overnight high  of 110.29.  

Until we get a look in at U.S. CPI on Friday and  April PPI, March trade balance tonight, as well as and March wholesale trade sales, with some potential for small revisions to Q1 GDP, its all on Trump and he continues to blow hot air  into the trade war bubble which is on the brink of bursting, well, at least as far as playing devil’s advocate would have it.

On the other hand, there is a very real danger that China will not play ball, in stark contrast to Trump’s latest comment, “Don’t worry about China, it will all work out.” The problem is, Trump  seeks improvement on the bilateral trade balance more than anything else and China can’t deliver on that, so this could go on and on.

Trump says China `broke the deal’ – Risk-off sending Aussie and yen lower, AUD/JPY- 0.23%

Markets overnight were in risk-off mode but there were some opportunities on the upside as sentiment remains mixed and until the Vice-Premier of China arrives in Washington, it really is all hearsay for now and anyone’s guess of where this is heading – Trump tweeted overnight that “China has just informed us that they  are now coming to the U.S. to make a deal – That is typical Trumoptimism  for you.  

However, the stock markets bought it and managed to stay afloat on a mixed close:  Wall Street ends more or less flat on trade talk optimism, DJIA bulls not out of the woods yet

As for US yields, the US 10yr treasury yield dropped from 2.46% to 2.43% then bounced back to 2.48%, 2yr yields similarly 2.29% to 2.25% to 2.30% and the chance of a Fed rate cut by December, implied by Fed fund futures, slipped from 85% to 80%.

Meanwhile, tomorrow we will have Fed Chair Powell delivering  opening remarks at a community development conference and other Fedspeak involves Evans and Bostic.

USD/JPY levels

The  USD/JPY  pair is at risk of falling further according to intraday technical readings, as, in the 4 hours  chart, it keeps developing below all of its moving averages, with the 20 SMA heading south almost vertically above the current level and below the larger ones. The Momentum indicator retreated sharply after nearing its mid-line,  while the RSI consolidates at 32, giving no signs of buying interest. A break below 109.90 should open doors for further declines, with a possible target for the upcoming sessions coming at 108.60.

Valeria Bednarik, the Chief Analyst at FXStreet explained.