Search ForexCrunch

   “¢   Optimism over US-China trade talks trigger risk-on trade and weigh on JPY.
   “¢   Resurgent US bond yields offset by weaker USD and fail to provide any additional boost.

The USD/JPY pair extended its consolidative price action and is currently placed at the top end of a narrow trading range, just below the 111.00 handle.

News that China will hold a fresh round of trade talks with the US offered some hopes over the resolution of trade conflicts between the world’s two largest economies.  

The headlines prompted some risk-on trade and weighed on the Japanese Yen’s safe-haven appeal, with the pair finding decent support near the 110.45 region.

Bulls also took cues from resurgent US Treasury bond yields, albeit a modest US Dollar profit-taking slide did little to provide any further bullish impetus and kept a lid on any further up-move, at least for the time being.

Investors also seemed to maintain a cautious stance and thus refrained from placing any aggressive bullish bets, which further collaborated to the pair’s subdued price action through the mid-European session on Wednesday.

Traders now look forward to the second-tier US economic docket – featuring the release of housing market data, Philly Fed Manufacturing Index and the usual initial weekly jobless claims, in order to grab some short-term opportunities.

Technical Analysis

The range-bound price action now seems to constitute towards forming a rectangular pattern on the 30-min chart. A convincing break through the mentioned trading range, leading to a subsequent move beyond 50-day SMA hurdle near the 111.00 handle should assist the pair to continue with its recovery trend.

Above the mentioned barrier, the pair is likely to surpass the 111.15 supply zone and head towards testing overnight swing high resistance, around the 111.45 region.