Chinese Commerce Ministry Spokesman Gao Feng has made a number of reconciliatory remarks regarding the US-China trade dispute, re-echoing the tone of comments that were first delivered by the Chinese Vice Premier over the weekend. According to Gao, the interests of US and China cannot be easily cut as they are intertwined. He also said that Beijing expects the US to cancel any planned additional tariffs to prevent the current US-China trade war from escalating.
Gao also said that the Chinese government hopes to see more sincerity and concrete action from the US, while also hoping that the US could meet China halfway on issues bordering trade. Finally, Gao said that China was “willing to resolve the issue via a calm attitude”.
The USDJPY gained moderately on these comments, hitting daily highs of 106.36 before retracing downwards to 106.22.
Technical Play for USDJPY
The comments by the Chinese commerce ministry have caused what can be described as a knee-jerk market reaction on the USDJPY. Later today, the US GDP report for the 2nd quarter will be released, and this is expected to dominate most of the price moves of the USDJPY in the New York session.
Analysts are expecting an economic contraction of 0.1% from the previous number of 2.1%, and this should serve as the trade trigger. If the US GDP comes in at 2.1% or higher, this should be USD-positive and trigger USD buying. If the US GDP comes in at 1.9% or lower, this could trigger USD-selling.
The 100-SMA continues to act as dynamic support for price action, while the key technical levels above this point are the R1 price level at 106.33 (R1 pivot) and 106.23 horizontal support (August 26 high). The upside break from the symmetrical triangle was checkmated at the R1 pivot by a hammer candle.
Downside target remains 15.98 and 105.75. A bounce off the candlestick will invalidate these downside targets, and the door will be open for attainment of 106.33 and possibly 106.56.