USD/JPY continues to trade above the two key hourly moving averages

Despite the yen and swissie staying bid as equities are weaker to start the day, buyers remain in control for USD/JPY as price continues to stay above the 100-hour MA (red line) @ 111.23 and the 200-hour MA (blue line) @ 111.24. The lows today tested the key levels but has since bounced higher thereafter.

That remains a key battleground between buyers and sellers this week and will continue to do so with the threat of Trump announcing tariffs to come. While markets will do what it does best and fade any real fear from the announcement, this time things could be different.

Rather than retaliating in equal measure tariffs, China will have to resort to other measures to respond to the US and they can't match the $200 billion worth of goods to slap tariffs on. So, depending on how they escalate the situation, that will prompt different reactions in the market.

Either way, it's making for some uneasy times as markets anticipate the imminent announcement of both the $200 billion tariffs by the US and China's response in kind.

For USD/JPY, buyers may be in control but with further escalation in the trade war looming, there is doubts on the pair being able to pull off any sustained rally at this point. The same can be said for all yen pairs in general actually.

Looking at the daily chart, daily resistance is seen @ 111.40 followed by swing highs around 111.80-90. Further resistance is then seen @ 112.15. Those will be key levels in keeping the pair in-check as fundamentals are favouring the yen in the near-term.

Those levels should put a lid on any near-term momentum to the upside in light of the escalation in the trade rhetoric between US and China.

Support

- 111.23-24 (100, 200-hour MAs)

- 111.00-04 (bids, 38.2 retracement level, large expiries)

- 110.90 (swing region)

- 110.70-80 (swing region, 50 retracement level)

- 110.50 (bids, 100-day MA)

- 110.00 (bids, swing region)

- 109.82 (200-day MA)

Resistance

- 111.40 (daily support)

- 111.80-90 (swing region)

- 112.00 (offers)

- 112.15 (August high)