The USDJPY remains range-bound as more negative US-China trade headlines hit the newswires. The US State Department has announced its intention to impose visa restrictions on certain Chinese officials.
These restrictions are coming after Monday’s export restrictions placed on several Chinese entities. The blacklisting of Chinese companies from government pension funds was also reported by Bloomberg.
The latest visa restrictions are targeted at key members of the Communist Party of China (CPC). The US government blames them for the violations of the rights of Muslim minorities in Xinjiang.
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The USDJPY has surprisingly continued to range trade between the 106.864 support and the resistance provided by the 38.2% Fibonacci level at 107.446. So far, the neckline of the potential double top pattern on the daily chart remains intact. Price has not yet breached critical support levels that would invalidate the pattern.
Generally speaking, the latest trade headlines remain largely negative, but are not having so much of a risk-off sentiment in early European trading. Perhaps traders are viewing these headlines as appetizers and are waiting for the main course meal from the meeting between officials of both sides, due to start tomorrow.
The technical setups identified in previous analysis of the USDJPY remain intact. The neckline at 106.864 remains the floor of the intraday range, while 107.446 remains the ceiling.
A break of 106.864 to the downside by a 3% penetration close validates the double top, with a measured move expected to terminate at 105.25 (Aug 9 low).
A break above 107.446 could open the door for resumption of the price move which may test the double tops at the 50% Fibonacci level (108.36). A break above this level invalidates the bearish pattern, which brings 109.36 (61.8% Fibonacci level) into focus.
More direction is expected to come from the headlines emanating from tomorrow’s opening session of the latest US-China trade summit.