USD/JPY Trendline Support Holding Firm at 109.500 After Pullback

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The USD/JPY currency pair failed to stabilize at 110.000 after making an early attempt. The pair trimmed the day’s gains to end the afternoon on the negative territory after the late Asian session failed to fire the pair up north.

At 14:00 GMT the USD/JPY currency pair was trading at about 109.700 in what looked like a consolidative ground. Traders will be looking to see how the market reacts depending on how the US stock market ends the week.

USD/JPY Fundamentals Overview

From a fundamental perspective, the current sentiment on the USD/JPY pair appears to be driven by risk-off trading due to the uncertainty surrounding the US-China trade talks.

On Friday, China’s foreign minister said that there was no update on Trump-Xi meeting at the next G20 Summit this coming June. This did not resonate well with risk-averse traders, which is why the USD/JPY failed to build on gains made earlier in the day.

In addition, after the US 10-Year Treasury Yield gained 2% yesterday, today it was down again by 1% confirming the sour sentiment towards the stalemate in the US-China trade talks.

This up and down movement in the trade talks could carry on to the foreseeable future, which is why USD/JPY traders continue to engage in risk-off trading.

USD/JPY Technical Analysis (the 60-min Chart)

Technically the USD/JPY currency pair appears to be trading within an ascending channel. This suggests that despite stalling in recent sessions, the bulls retain control in the intermediate time frame.

This creates some interesting opportunities for both the bulls and the bears. Those looking to strike profits for the pair’s upside potential will look at 109.990 or 109.800 for short-term traders.

On the other hand, the bears will look to strike profits by targeting 109.396 or lower at around 109.194.

USD/JPY Technical Analysis (the Daily Chart)

In the daily chart, the pair appears to be oscillating within a wide sideways channel that is beginning to converge right at the end. This suggests that the pair could be consolidating ahead of what could be a major breakout.

As such, the bulls will fancy themselves to retain control going into next week despite the recent pullback, but the bears will claim to have momentum in the short-term.

In summary, the USD/JPY currency pair is trading at the back of what has been a week of mixed economic data and geopolitical discussions.

If stalemate continues between the US and China, traders will continue to trade off-risk, which could drive the pair further down.

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