USD/JPY: falling fast on reports US-China trade deal unlikely

• The anti-risk Japanese yen picked up a bid few minutes before press time, possibly due to reports stating that US-China trade deal is unlikely to happen this month.
• The pair could drop to 113.14 - 38.2% Fib R of 111.38/114.23 - as indicators on the daily chart are rolling over in favor of the bears.
• A deeper drop below 113.14 could be seen if the equities turn risk-averse.  

The Japanese yen is pushing higher against the US dollar on fading prospects of a breakthrough US-China trade deal.

At press time, the USD/JPY pair is trading at a session low of 113.34, having clocked a high of 113.64 earlier today.

The pair created a long-legged doji candle yesterday as it recovered sharply from intraday low of 113.10 to 113.62 after rumors hit the wires that the US is planning to put next tariffs on hold.

The resulting optimism has been squashed by comments from a senior Trump administration official that China's written response to the demands for trade reforms is unlikely to enable a trade deal between the world's two biggest economies.

So far, there are no signs of stress in the Asian equities. For instance, the Shanghai Composite is trading largely unchanged on the day and other Asian indices except Nikkei are trading flat to positive.

The S&P 500 futures, however, are down 0.35 percent, meaning markets could turn risk-averse ahead in the day, driving the USD/JPY below the key Fib support of 113.14.

Technicals are aligned in favor of the bears. The 5- and 10-day EMAs are rolling over in favor of the bears and the daily MACD is staring at a bearish crossover.

USD/JPY Technical Levels