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  • USD/JPY retreats from a five-week top amid market consolidation.
  • Greenback slumped to a fortnight low amid downbeat testimonies from Fed Chair, US Treasury Secretary.
  • US-China tussle intensifies, US President Trump tries to spread optimism but gains a little success.
  • Japanese Machinery Orders, trade/virus headlines will be the key.

Having slipped from the highest since April 13, USD/JPY bounces back to 107.75, from an intraday low of 107.66, amid the early Asian session on Wednesday.

US-China story keeps markets entertained…

Although US President Donald Trump recently announced that he might permanently freeze the US contribution to the World Health Organization (WHO) due to the institute’s favor to China, the Republican leader isn’t stepping back from the trade deal with the dragon nation.

The move could be held responsible for the pair’s recent recovery as the White House Adviser Larry Kudlow said that US President Trump is not saying he was tearing up China trade deal.

Additionally, US President’s push for early economic restart, by signing deregulatory order, as well as support for further stimulus also played their part to please the greenback traders.

While the US dollar registered broad weakness the previous day, it managed to gain versus the Japanese yen amid mostly upbeat trading sentiment. In doing so, the yen pair seems to have ignored US-China tussle and downbeat testimonies from the Fed Chair Jerome Powell and Treasury Secretary Steve Mnuchin.

It’s worth mentioning that a lack of major updates on the coronavirus (COVID-19) cure, as well as Aussie-China tension, weighed on the market’s risk-tone off-late.

That said, S&P 500 Futures drop 0.13% to 2,912 by the press time after the US 10-year Treasury yields and Wall Street marked losses at the end of Tuesday.

Moving on, Japan’s March month Machinery Orders, expected -9.5% versus -2.4% prior YoY, may offer immediate direction to the pair ahead of the likely busy US session. Though, headlines concerning the US-China and Aussie-Sino relation, coupled with the virus updates, might not lose their importance in between.

Technical analysis

A short-term rising wedge formation keeps the USD/JPY pair vulnerable to the fresh downside unless it crosses the resistance line stretched from April 30, currently near 108.10. Even so, a 50-day SMA level of 107.85 can offer intermediate support ahead of the formation’s lower line, at 107.25 now.