The morning session has been volatile and the USDJPY pair jumped 50 pips to fresh two month highs above 112.20, only to give up all gains shortly after as the White House announced it has imposed tariffs on approximately 200 billion USD worth of imports from China.
The tariffs will be effective since the next week, will start at 10% until the end of the year, but are set to rise to 25% on January 1, 2019. As investors had expected only 10% tariffs, this was a negative surprise, which led to a sell-off on the stock markets and strengthened the Japanese yen.
There are no major macrodata on the agenda today and therefore trading will be influenced solely by sentiment, which appears to be mildly negatívne for the JPY crosses today. Top of Form
The USDJPY pair posted what appears to be a bearish pin bar, which implies downward momentum could soon begin. The confluence of supports is seen at 111.80, where previous highs are converged with the steep bullish trend line. Should this support crack, further downside momentum toward 111.60 could occur.
On the upside, the pair needs to stay above 112 for bulls to catch a break, with the next target at today’s highs around 112.25.
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