USD/JPY is its most oversold since January's flash-crash, but can't rebound because it's becoming clearer the U.S. is willing to continue upping the stakes in its trade war with China [[, while the 0.4 percent drop in U.S. real average weekly earnings in April and softer CPI also increase the potential for Fed rate cuts .
USD/JPY's 1.5 percent intraweek fall to 109.47 has probed the weekly cloud base at 109.55 and broken March's 109.70 swing low.
A close below the cloud would foster completion of a Fibo-projected move to 108.73 next week.
Risk traders and the yen shorts that funded some of those positions, are hoping an agreement today to prolong U.S.-China trade talks will be enough to reduce derisking flows.
But the rise in tariffs to 25 percent on $200bln of imports, threats to tariff all Chinese imports and a May 18 Commerce Dept report on whether to begin auto tariffs mean USD/JPY upside is limited.
The trade-fear driven squeeze of hefty short yen spec positions this week also saw equities and other non-haven assets sold sharply , leaving them with some support from pre-weekend book-squaring that might be wrongly be seen as signaling less trade war risk.