FxWirePro: Sell USD/JPY targeting 106.7 area

Yen is in retreat today, as risk affinity returns to the market,

• USD/JPY is declining since last night as global stock markets recovered grounds n late Wednesday trading and as the USD bulls failed to clear support around 109.1 area.
• USD/JPY is currently trading at 109.7 area amid a stronger USD and fading risk-aversion.

However, our calculations at FxWirePro suggests that such relief is only temporary as risk aversion is likely to return as no material progress has been made with regard to Sino-American trade negotiations with both sides preparing measures that would push the conflict to the next level. The United States is preparing grounds to impose 25 percent tariffs on $300 billion worth of goods from China. China, on the other hand, planning to use rare earth minerals, which are essential for industries like information technology to automotive as a tool in its tariff war with the United States. China is the single biggest producer and exporter of rare earth minerals and U.S. depends heavily on China which is the source of 59 percent of U.S. imports.

Trade idea:

• Sell USD/JPY at the current rate of 109.7 and at rallies with a target of 106.7 area, and the stop loss around 110.7 area. The ongoing upside correction in USD/JPY likely to find sellers 110.1 area.