With renewed US-Chinese trade tensions, and with both US dollar and Japanese Yen are considered safe-haven currencies, that helped the USD / JPY break back to the 109.02 support level, the lowest level for more than 3 months, and the pair has been trying to break above that for two sessions to 109.76, where the pair is near to at the time of writing, as the move below support at 109 will increase the downward pressure of the pair and push it far away from the 110.00 resistance which separates the bullishness from the downside strength.
China responded to the United States by imposing new tariffs on $ 60 billion worth of US products after Trump carried out its threat and imposed more tariffs on the $ 200 billion worth of Chinese products despite the continued optimism that the agreement between the two sides was close to end that trade war which threaten the world economy.
The US economy managed to add new jobs more than expected, the unemployment rate fell to its lowest level in 49 years and the average hourly wage rose.
The Federal Reserve Board kept the interest rate unchanged as expected, pointing out that it is unlikely to raise or lower interest rates in the coming months amid signs of renewed economic health while at the same time inflation is still unusually low. The Bank's policy statement highlighted its continued failure to raise the annual inflation rate to at least 2%. Referring to a drop in inflation, the statement may have raised expectations that a change in the next federal interest rate is a rate cut to stimulate inflation or growth.
We noted in the previous technical analysis that the daily chart clearly shows a new bullish consolidation zone for the pair and that this performance foreshadows the pair's upcoming move towards further gains or bearish correction with the profit-taking operations.
Technically: As we had previously predicted, the stability of the USD / JPY below 110.00 will increase the bearish momentum of the pair, and the next support levels may be 109.30, 108.70 and 107.80 respectively, which confirm the strength of the bearish trend. On the upside, the nearest resistance levels are 110.25, 111.30 and 112.75, respectively. We still prefer to buy the pair from every bearish bounce.
In today's economic data: the economic agenda will focus on Chinese data and the United States retail sales and industrial production data. The pair will be watched with caution and interest in renewed global geopolitical concerns, and all about Trump's internal and external policy.