FTSE - Trump
The USDJPY will come into focus on Tuesday as US President Donald Trump speaks at the Economic Club in New York at 5pm GMT. Investors will scrutinize Trump’s comments for further details on the mysterious ‘Phase One’ deal. On Monday, US market futures were able to rally on renewed optimism on the US-China trade front.
What really is the “Phase One” deal all about? Would Trump finally address all the rumours about the tariff rollbacks and the extent of such actions, if any? These and other answers are what investors would be seeking during this speech.
As at the time of writing, the USDJPY was marginally higher on the day at 109.23; representing a 018% gain on the day.
The strong resistance at 109.30 (61.8% Fibonacci level and the August 1/October 30 highs) continues to limit strong upside movement. If there is anything that USD buyers are waiting for to get some lift on this pair, this speech could be it if Trump speaks the right words.
A break above 109.30 could target the May 21 high of 110.65 (78.6% Fibonacci retracement level), but a pitstop exists at the May 30 high of 109.94.
On the flip side, the July 16 and September 17 highs of 108.37 (both located at the 50% Fibonacci retracement level) would the initial downside targets if the market optimism dissipates as a result of comments that suggest that the US would not give in to Chinese demands on a tariff rollback or any other knotty issue. Further downside could also be seen at 107.53 (July 3 low and 38.2% Fibonacci retracement level) and 106.86 (June 25/October 8 lows).
A USD-negative speech could lead to a precipitous drop for the USDJPY, which is already in a rising wedge pattern.