USD/JPY and Treasury yield rebounds are getting an added boost from President Trump's comment that a trade deal with China could happen sooner than expected, but prices need to breakout above the weekly kijun at 108.43 to extend the August-September recovery.
Today's USD/JPY rally found decent support by 38.2% of the 104.46-108.48 rebound and 30-DMA at 106.95, as well as the weekly tenkan at 106.89.
Given past deteriorations in U.S.-China trade negotiations, (just witness what's transpired this week nL2N26G0OL), the President's positive comment today will require some substance, perhaps from senior trade talks expected the week after next.
With the street having shaken off the impeachment risk-off -- sell USD and buy haven JPY -- reflex from yesterday, underwater IMM spec shorts could get squeezed if this week's bullish chart pattern plays out.
So far, prices have retaken the daily tenkan at 107.72, but not the 10-DMA at 107.88 that sits ahead of large 107.90/8.00 expiries on Thursday.
But if this month's 108.48 high by the key 108.43 hurdles is cleared and closed above, the unwinding of spec shorts could send prices toward August's high, the weekly Cloud base and 61.8% of the April-August slide at 109.32/37.