Risk assets rally amid trade talk developments; USD/JPY eyeing higher levels

Risk assets rally amid trade talk developments; USD/JPY eyeing higher levels

Following the agreement between the United States (US) and China to temporarily reduce tariffs, there has been a notable unwinding of safe-haven assets and an increase in demand across risk. Recent developments show the US is preparing to lower levies from 145% to 30%, while China is set to decrease tariffs from 125% to 10%.

Safe-haven assets weighed

Along with the Swiss franc (CHF) and Spot Gold versus the US dollar (XAU/USD), the Japanese yen (JPY) is on the back foot today. The USD/JPY currency pair is up 2.0% today and has rallied nearly 4.0% on the month, poised to snap a four-month losing streak.

USD/JPY bulls to remain on the offensive, targeting ¥149.00?

Technically, support remains clear on the monthly scale of USD/JPY at ¥140.31, a base that is complemented by the Relative Strength Index demonstrating signs of rebounding from the 50.00 threshold (and the lower boundary of a falling wedge taken from 86.72 and 56.82). Buyers certainly have room to stretch their legs on the monthly timeframe, with resistance calling for attention at ¥160.20.

As long as the unit closes above the ¥148.28 high (9 April) on the daily chart today, this will not only provide support around ¥148.15 to work with but also unlock the door for further upside towards the 200-day simple moving average (SMA) at ¥149.68. This is closely shadowed by another layer of possible resistance between ¥150.99 and ¥150.16, as well as Fibonacci resistance at ¥152.05-¥151.61.

If you drill down to the H1 chart, you will note another support that warrants attention at ¥147.43. Should daily price fail to close above ¥148.28, I will closely monitor H1 support from ¥147.43 as another potential floor, with an immediate upside objective at ¥149.00, followed by the 200-day SMA at ¥148.69, as mentioned above.

Charts created using TradingView

Written by FP Markets Chief Market Analyst Aaron Hill

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