Though the U.S.-Mexico tariff clouds have for now parted and recession-priced U.S. yields have bounced a bit to lift USD/JPY, prices remain below the bearishly positioned weekly kijun line at 108.81 by today's 108.80 June high, with U.S. CPI and retail sales event risks before next week's FOMC meeting.
Prices fell below the weekly cloud base in May and last week traded wholly below the 109.55 base and the then 108.90 kijun.
The last two times USD/JPY closed below the weekly Kijun on a weekly basis was in December, where it led to a 6.4% drop, and in January 2018, leading to a 5.8% dive, with both subsequent bottoms in the 104.00s.
So far, the current fall after a close below the kijun has been minimal, finding support at 107.81, very close to 107.77, the first weekly low following January's flash-crash to 104.10.
If tomorrow's U.S. CPI and Friday's retail sales reports don't get USD/JPY to close above the kijun, a bigger decline is likely.
The weekly cloud twists to a flat top at 109.32 the week of the June 28-29 G-20 meeting that's likely pivotal for the U.S.-China trade war and USD/JPY.
Chart: Click here