Today's USD/JPY rebound has set up another selling opportunity as de-risking flows resume after weak U.S. data and ahead of the Trump-Xi meeting at month-end.
Indeed, below-forecast durable goods data nUSNLMEENU, signs jobless claims may have bottomed nLLALMEEFO and persistent U.S.-China trade war friction don't bode well for USD/JPY or JPY crosses.
The overnight risk-on moves appear to have been mostly book-squaring before the Thanksgiving holiday.
U.S. stocks becoming less overpriced and 10-year Treasury yields holding key 50 percent retracement support Tuesday created something of a toehold for today's cross-asset risk-on mean reversions.
However, dimming U.S. data and a festering trade war suggest today's 113.15 high by the daily tenkan at 113.25 is an attractive spot for underwater IMM longs to let go of those trades.
The options market is heavily long gamma, but expiries on November 1 and December 3, when the Trump-Xi meeting risk hits, are tiny.
This is indicative of little willingness to stand in front of the volatility from that event.
With Fed rate-hiking expectations in retreat, an eventual break and close below the 100-DMA, last at 112.10, is likely.
That would target October's low and the weekly kijun at 111.38/33.