USD/JPY trades with modest losses, just below 1-1/2 week tops

   “¢   Resurfacing US-China trade tensions underpins JPY’s safe-haven demand.
   “¢   Subdued USD price action does little to help build on the overnight upsurge.
   “¢   Fedspeak/FOMC minutes eyed for some near-term directional impetus.

The USD/JPY pair traded with a mild negative bias on Tuesday and eroded a part of the previous session’s strong up-move to over one-week tops.  

A combination of supporting factors helped the pair to catch some aggressive bids on the first trading day of a new week and build on last week’s goodish rebound from monthly lows.  

Improving risk appetite, as depicted by strong gains across global equity markets, weighed heavily on the Japanese Yen’s safe-haven status and turned out to be one of the key factors driving the pair higher. The positive momentum got an additional boost from a late pickup in the US Dollar demand, lifting the pair to an intraday high level of 113.65, or the highest level since Nov. 15.

However, resurfacing US-China trade tensions, following the US President Donald Trump’s comments to move ahead with raising tariffs on $200 billion in Chinese imports to 25% from 10% currently bolstered support for safe-haven currencies and eventually kept a lid on the pair’s strong up-move. Adding to this, a subdued USD price action further collaborated to the pair’s weaker tone through the Asian session on Tuesday.

Moving ahead, today’s release of Conference Board’s US consumer confidence index for Nov. and speeches by various FOMC members will now be looked upon for some short-term trading impetus. Meanwhile, the key focus will be on the Fed Chair Jerome Powell’s scheduled speech on Wednesday and minutes from the latest FOMC meeting on Nov. 7-8 on Thursday, which will be closely scrutinized for clues about the Fed’s near-term policy direction and help determine the next leg of directional move.  

Technical outlook  

Omkar Godbole, Analyst and Editor at FXStreet writes, “the pair is trading at 113.46 and is trapped in a symmetrical triangle. The triangle resistance is currently seen at 114.09 and the support is located at 112.60. The triangle, however, could be breached on the downside if the Fed officials put more emphasis on risks to the US economy, forcing markets to price in a potential rate pause in 2019.”