As US earnings season enters the final stages, the market's focus might switch back to geopolitical concerns, undermining USD/JPY.
Trade talks between the US and China don't appear to have made much progress, with the US delegation reportedly asking China to cut its trade surplus by USD200 bln, double the amount Trump had previously requested nL3N1SB31V.
If the US-China brinksmanship prevents either side finding common ground, fears of a trade war will be reignited.
Meanwhile, the deadline for renewing the Iran nuclear deal is May 12 and judging by the rhetoric from the White House, it is unlikely to be renewed, meaning the US will slap sanctions on Iran nL8N1SD03S.
The USD/JPY could move lower in the current environment.
The pullback from the 110.00 level and 200-day MA (110.20) might encourage Japanese exporters to sell rallies near those levels.
If geopolitical concerns do rev up in the coming week, it should support the JPY as a safe haven.
US Treasury yields will be key.
If the 10-year UST yield continues to stall around 3.0% and starts to move lower, it will support the case for a lower USD/JPY.
USD/JPY: Click here