A knock-on drop in Treasury yields from the ECB's easing nAPN04ZWRA dragged USD/JPY down toward Wednesday's 107.50 low and Fibo hurdles cleared by there this week, creating a second chance for underwater IMM spec shorts to exit and outright buyers to join the unwinding of August's trade war driven 109.32-104.46 plunge.
Trade news has become less daunting, with Trump delaying tariff hikes due Oct.
1, China exempting a few U.S. import tariffs and talk about increasing demand for U.S. agricultural goods ahead of upcoming trade negotiations nL3N2621DV.
Whether this leads to further de-escalation, which would boost USD/JPY via higher Treasury yields and less demand for the haven yen, remains to be seen.
There's also lingering concern about recession-linked and bank profit-dimming curve flattening after today's ECB easing featured less of a depo rate cut than hoped and open-ended QE that many had doubted.
Though, today's core U.S. CPI and jobless claims beats support U.S. yields, even as curve flattening and Trump's calls for the Fed to cut rates to zero and a weaker USD grow louder .
USD/JPY remains on track to reach 108.43, 50% of the April-August drop and the Aug.
1 breakdown point while 55-DMA support at 107.22 is in place.