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USD/JPY inches higher as risk sentiment shows further signs of improvement

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The yen is the weakest performing major currency on the day


USD/JPY now rises to a high of 111.47 on the day as the dollar catches a light bid across the board but also as the Nikkei pushes higher into the close. The Japanese main stock index is up by 1% on the day now as risk sentiment continues to improve following some relief in the trade rhetoric between US and China overnight.
For USD/JPY, the pair stays underpinned as buyers continue to defend the near-term bullish bias overnight and earlier today. There was a bit of a dip in the pair despite the positive risk news in overnight trading but we’re seeing price correct itself now after holding above the 100 and 200-hour moving averages.
That becomes a key defining risk level for the pair now in my view. However, the pair is also still struggling for upside breaks recently:

The highs just under 112.00 have so far been acting as key resistance levels for the pair and that is limiting any potential breaks higher for the time being. Despite the improvement in trade rhetoric and risk sentiment, we’re still in a fragile state when it comes to this and any negative headlines will be capitalised upon by sellers in an instant.
I don’t expect much progress to be made in trade talks between US and China, so any relief rally in yen pairs may not have too far to run. For USD/JPY, 112.00 remains a key hurdle in the near-term in such a case.

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