- Summary:
- USDJPY is leading gains among the major currencies as US President Donald Trump quickly reiterated that the US-China trade deal is still on the table.
USDJPY is leading gains among the majors in today’s trading after a volatile start to the Asian session. The currency pair initially spiked down to a low of 106.73 after news that the US-China trade deal is no longer in place. However, USDJPY quickly recouped its losses when US officials clarified that it is still intact. As of this writing, USDJPY is up by 0.25% as it trades at 107.167.
White House trade adviser Peter Navarro appeared on a Fox interview earlier today and said that US President Trump has terminated the deal with China. According to him, intelligence reports show evidence that the coronavirus originated in a laboratory in Wuhan. With this statement, distrust for China has grown even more. It would seem that the US government was keen on ending its trade deal with the world’s second largest economy.
However, in a sudden turn of events, US officials like US economic adviser Larry Kudlow and US President Donald Trump reiterated that the deal with China is still on the table.
These string of events would explain the volatile movements across all USD-pairs in this morning’s session.
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USDJPY Outlook
On the 1-hour chart, it can be seen that USDJPY has broken above the consolidation that it has been trading in since June 18. In fact, when you connect the highs and lows of the currency pair, it becomes apparent that USDJPY is now trading above the falling trendline. When you enroll in our free forex trading course, you will learn that an upside break from a symmetrical triangle is widely considered as a bullish indicator.
A look at the 4-hour chart shows a potential double bottom chart pattern. However, for this to be completed, USDJPY needs to test near-term resistance at 107.50 where the 200 SMA aligns with the neckline resistance. If there are enough buyers to push the currency pair above this level, we may even see USDJPY go all the way up to 108.00 where it found resistance in late May 2020.
On the other hand, be wary of a bearish close below today’s low at 106.71. This would invalidate the double bottom chart pattern and hint that there are still sellers in the market. Should this happen, we could soon see USDJPY fall to 105.97 where it bottomed on May 7.