The U.S. has upped the China trade war ante, threatening tariffs on $200 billion worth of goods.
Beijing has promised to hit back against Washington's escalating tariff measures, including the use of "qualitative measures" nL4N1U71IM.
That does not bode well for USD/JPY.
Long USD/JPY already showed signs of being stretched - heightened risk aversion usually sees flows into the relative safety of the yen.
USD/JPY traded circa the 30-day upper Bollinger band on Tuesday, closed below.
The 30-day upper Bollinger band is now at 111.22; Wednesday 110.77-111.14 EBS range is once again wholly below, indicating a technically overbought market.
IMM data for the week ending July 3 showed a futures market long an equivalent cash USD/JPY position of $4.4 billion.
The risk is growing for a dip to the 30-DMA, now 110.25.
A break and daily close below would weaken the market structure further.
On the upside, a major falling trend line from 2015 comes in at 111.57, which provides a tough obstacle for medium-term bulls.