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  • USD/JPY bears the burden of US-China trade/political tension.
  • Comments from China act as an immediate catalyst, criticism to the US interference earlier weighed on phase-one optimism.
  • BOJ Minutes will be observed to seek clues of 2020 policy moves, holidays in most Asia could restrict market moves.

USD/JPY stays under pressure around 109.40 amid Tuesday morning in Asia. That said, the latest statements from China seem to pour cold water on the US President Donald Trump’s weekend comments over trade relations with Beijing.

Trade tension persists”¦

China’s Global Times recently spread the words that Beijing’s latest decision to reduce tariffs on more than 850 foreign products  is not the result of the US trade war but to open up the massive domestic market. Following that, comments from State Councillor and Foreign Minister Wang Yi also criticized the US while saying that the US needs to work to restore trust established between the two countries in the past four decades.

US President Trump’s comments signaling nearness to sign the phase-one failed to convince investors of healthy future trade relations between Beijing and Washington. The reason can be attributed to China’s dislike for US interference in internal matters concerning Taiwan, Hong Kong, etc.

Even so, the US 10-year treasury yields gain near two basis points to 1.933% whereas S&P 500 also signaling positive signs to 3,228 by the press time.

Other than trade/political headlines, downbeat readings of the US Durable Goods Orders and New Home Sales also weighed on the USD/JPY pair.

Moving on, minutes of the Bank of Japan’s (BOJ) latest monetary policy, up for publishing at 23:50 GMT, will be closely observed for fresh clues. The Japanese central bank left monetary policy unchanged at its recent meeting. Though, reduction to assessment on industrial production and Governor Haruhiko Kuroda’s favor for easy money policy kept the Japanese yen (JPY) on the back foot. Traders will check details to forecast how long the massive monetary easing will stretch considering the recent criticism of too-low interest rates from Japanese diplomats.

With the most Asian markets off, traders have a little to follow and hence trade/political headlines can become the key to watch for near-term direction.

Technical Analysis

21-day Simple Moving Average (SMA) near 109.10 offers immediate support to the pair whereas buyers will stay away until the pair crosses 109.75/80 resistance area.