China coming to the US to make a deal.
Pres. Trump tweeted that China is coming to the US to make a deal (see Adam’s post here). That has given stocks a boost (the Dow futures implied an unchanged level after being down about -100 points minutes ago. It is down -40 now).
The USDJPY has also reacted to the upside and traded up toward the sessions high. Looking at the hourly chart below, the pair reached a topside trend line and stalled. Most of the run has been retraced (started around 110.04 and traded down to 110.06).
The up and down, woke the USDJPY traders and reminds us of the risk from the headlines as China officials come to Washington with the threat of 25% tariffs looming over their heads. Are they really going to make a deal or will they balk at the demands? It’s hard to judge the mood and how far they will go. That will keep the markets nervous.
What we do know, is that on move higher, the trend line near the highs at 110.287 and then the 38.2% of the last move lower, and the 100 day MA at 110.565 and 110.603 are the next key upside targets (with the falling 100 hour MA at 110.819 another target). Steps above tilt the bias little by little to the upside. That is the roadmap higher.
On the downside, the 109.695 was the March low. That would be the next target on the break of the lower trend line. Below that, the lower trend line on the hourly chart targets 109.40 currently (and moving lower).