The USD/CNY fall below 7.0 could be a bullish cue for USD/JPY.
Since USD/CNY broke above what markets had perceived as a ceiling at 7.0 in August, when the U.S.-China trade war escalated, the retreat now as Beijing and Washington attempt to ease tensions nL2N27K0S7appears symbolic.
USD/JPY is rising toward 200-DMA and Fibo resistance at 109.03 nL2N27L0FF as global risk-on flows were bolstered by overnight reports the phase one trade deal could feature not only suspension of Dec.
15 tariff hikes from the U.S. but removal of Sept.
1 tariffs increases.
If true, Treasury yields and riskier assets will surge, as the haven yen falls.
Both sides are hopeful a deal could be done this month.
There is, however, some skepticism the U.S. will agree to reduce tariffs without also having the option to reinstate them if it feels necessary. For now 109.03 is the next hurdle, but USD/JPY may need U.S. confirmation of today's de-escalation stories to close above there and much bigger 109.32-37 resistance. After that, 110 and 2019's 112.40 high would become medium-term targets.