For the fifth consecutive day, it appears to be clear that the USD/JPY is moving in a limited move narrow range between 108.30 support and 108.93 resistance, before settling around 108.47 at time of writing. The pair is in a wait-and-see mode in order to obtain stronger catalysts to complete the pace of the bullish correction, or to faile and return to the downward pressure that remains intact over the long term. The US dollar remains under pressure from a cut in US interest rates for a third time by the US central bank when it meets next week. What supported Investors' risk appetite, which is bad for the Japanese yen, was the optimism over the course of trade negotiations between the United States and China to resolve the strongest trade dispute that threatens the future of global economic growth.
Signs from China that trade talks are going well have been seen as a signal to US President Trump that they really want to reach an agreement. The People's Bank of China recently injected 250 billion Yuan (about $ 35 billion) of liquidity into the banking system, a day after the interest rate on newly-granted loans was left unchanged. The bank seems designed to help prevent stress before paying corporate tax at the end of the month. Officials continue to point out their reluctance to provide broad economic stimulus despite expectations that China's economic growth will slow to less than 6% next year.
Investors are awaiting US Vice President Pence's speech on Thursday to look for new signs of Trump administration intentions. The official often takes a hard line on China.
According to the technical analysis of the pair: A bullish stability for the USD/JPY and is currently looking for incentives to complete the correction because the resumption of movement below 108.00 is a threat to recent gains, as it will increase pressure from the bears to move towards stronger support levels down to 107.75 and 106.90 respectively. I still stress that the 110.00 psychological resistance remains the strongest step for the current bullish correction.
As for today's economic data: Today's economic calendar has no significant economic data from either Japan or the United States. Keeping in mind that increasing global trade and geopolitical tensions will favor the Japanese yen as a safe haven in times of uncertainty.