USD/JPY's slide on lower U.S. yields following the dovish FOMC will persist if the Fed's belated policy flexibility proves necessary.
While fear of excess Fed tightening exacerbated Q4 derisking nL1N1ZB15F, the trade war's negative effects on the global economy, Brexit fears and dwindling European economic growth all played parts.
Trade impediments and supply-chain uncertainty linger as U.S. and Chinese trade officials wrap up this week's meetings today.
If Trump's upbeat take on the prospects for a deal nL1N1ZV0HC proves correct, this would relieve one overriding economic risk the Fed faces.
Whether that and rallying asset prices are enough to revive stuttering global growth and push the Fed toward USD-bullish tightening talk again remains to be seen. U.S. and other stock markets had already made meaningful recoveries from late 2018 lows before the Fed's somewhat confusing U-turn yesterday.
For now, USD/JPY looks headed for 107.77/75, the January 10 low and 50 percent of the 104.10-110 post-flash crash rebound.
Failure to retake prior props at 109.14 will weigh.