“¢ Quickly reverses an early dip led by the new US tariffs on Chinese imports.
“¢ A modest uptick in the US bond yields provides an additional boost.
“¢ China’s promise to retaliate prompts some weakness in the last hour.
The USD/JPY pair built on its intraday up-move and spiked to near two-month tops in the last hour, albeit retreated few pips thereafter.
The pair initially dropped to a three-day low level of 111.66 in a knee-jerk reaction to the latest US tariffs on an additional $200 billion worth of Chinese imports.
Meanwhile, a 10% tariff was much lower than 25% previously feared and triggered some risk recovery, which was eventually seen denting the Japanese Yen’s safe-haven appeal.
Adding to this, a modest uptick in the US Treasury bond yields provided an additional boost and further collaborated to the pair’s goodish intraday rebound of around 60-pips.
The up-move, however, quickly ran out of steam, with the pair quickly slipping back below the 112.00 handle after China said that it has no choice but to levy retaliatory tariffs simultaneously with the US.
With escalating US-China trade tensions back in focus, the pair remains at the mercy of any fresh trade-related news/developments amid absent relevant market moving economic releases.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet writes, “the pair is more likely to test the 200-week MA of 113.23 in the next week or two and the outlook remains bullish as long as the spot is holding above Thursday’s low of 111.17.”
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