USD/JPY fell below its 100-day moving average in overnight trading
And with that break, sellers have regained momentum in the pair and is building on a further move to the downside so far today. Despite a much calmer tone in US equity futures and Treasury yields, the pair is still weaker by 0.2% as price is testing bids around 109.90-00 ahead of European trading.
The 1.8% decline in the Nikkei isn’t helping sentiment in that regard and risk sentiment is expected to still play a major role in dictating the pair’s direction today, given that there is little on the economic calendar to ruffle some feathers.
As such, US-China trade talks headlines will be the focal point but if there is silence regarding that, then expect markets to stay cautious in anticipation of tomorrow’s meeting in Washington between the two countries.
As for levels to watch out for today, the 109.00-00 region is key for support before price moves on to test the swing region around 109.71-78. If that starts to fall apart, light bids is seen closer to 109.50 but the ball will very much be in the sellers’ court if price breaks the swing region noted above; I wouldn’t rule out a further downside move if those levels give way.
Hence, for buyers, it will be key to stay above the 110.00 handle but for any upside extension, price will have to move towards a test of the 100-day MA (red line) @ 110.58. Otherwise, sellers are in control now and the bias is still favouring the downside before we get more details on US-China trade talks.