USDJPY passes 110 overnight: Can the gains persist?
USDJPY traded above the 110 level for the first time since May overnight, but slipped again on new details about the phase one US-China trade deal, closing at 109.99 on the day’s trading.
Markets have been riding a wave of positive sentiment and optimism, and hoping for good news in today’s Phase One trade deal signing. Yesterday, the US removed China from its list of currency manipulators - more of a sentimental signal than anything meaningful - yet price action took USDJPY beyond 110 after opening the day at 109.94.
As details emerged that tariffs would not be reduced further until after the US election in November, and any possibility of tariff reduction will rely on Beijing’s compliance with today’s agreement. USDJPY dipped towards 109.970 on the news, presumably as a handful of traders had positioned for a near-term rollback. Treasury yields and US stocks were also bid down.
We’re watching for a re-test of the 109.76 for confirmation of the bullish breakout, and that resistance is now our support level. With confirmation we’d go long USDJPY.
110 is a level not seen since May last year. USDJPY has since traded as low as 104.450 in August, as tariffs and rhetoric boiled over in the dragging trade war.
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