Search ForexCrunch

   “¢   A modest USD uptick/risk-on mood helps catch some bids near 100-DMA.
   “¢   Weaker US bond yields fail to provide any additional boost to the uptick.

The USD/JPY pair extended its steady climb from the Asian session low level of 110.41 and has now turned positive for the day.  

The pair once again managed to find some buying interest near 100-day SMA support, with a modest US Dollar uptick helping the pair to recover around 25-pips from daily lows. Adding to this, the prevalent risk-on mood, triggered by optimism over a fresh round of US-China trade talks, further weighed on the Japanese Yen’s safe-haven appeal and remained supportive of the modest uptick.  

Trade war fears eased further on Monday following reports that the US President Donald Trump and Chinese leader Xi Jinping”¯may”¯meet in November to resolve intensifying trade disputes between the world’s two largest economies. This comes on the back of last week’s announcement that lower-level trade talks would be held on August 22-23 and helped lift investors’ appetite for perceived riskier assets.

Meanwhile, a weaker tone around the US Treasury bond yields did little to provide any follow-through boost, with the USD price dynamics and broader market risk sentiment acting as key drivers of the pair’s momentum amid thin economic docket at the start of a new trading week.

Moving ahead, this week’s important releases of the FOMC meeting minutes and the US durable goods orders data, along with the Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium will now be looked upon for some fresh directional impetus.  

Technical levels to watch

Any subsequent up-move is likely to confront strong resistance near the 110.90-111.00 region (50-day SMA), above which the pair is likely to target last week’s swing high, around the 111.40-45 supply zone. On the flip side, the 110.40-35 region (100-day SMA) might continue to protect the immediate downside, which if broken might turn the pair vulnerable to head back towards challenging the key 110.00 psychological mark.