The Nikkei 225, Hang Seng Index, and ASX are all trading higher today on news that the US and China are still on good terms. As of this writing, the Nikkei 225 is up by over 2.40% at 20,150.00. The Hang Seng Index is in the green by 0.96% at 24,210.09. Meanwhile, the Australian Stock Index is positive by 1.33% at 82.04.
However, this morning, Reuters reported that trade representatives from both countries spoke on the phone. US and Chinese policymakers supposedly agreed to follow through with the Phase One agreement which was agreed on in early 2020.
It could also be that market participants are reducing their long-USD positions ahead of the US NFP report later. Following the ADP Employment Report earlier this week, investors are bracing for another huge drop in jobs for April. The forecast is at -22 million with the unemployment seen to rise from 4.4% to 16%.
On the 1-hour time frame, it can be seen that USDJPY is trading within a descending channel. As of this writing, it has retraced some of its losses to the 23.6% Fib level (when drawing from the high of April 30 to the low of May 6). If there are enough buyers in the market, USDJPY could make a run for its near-term resistance around 106.90. This price coincides with the top of the channel, the 100 SMA, and the 61.8% Fib level. If there is enough bullish momentum, it could even rally to 107.85 where it could test the 200 SMA and the highs for April 23.
On the other hand, if sellers dominate trading, USDJPY could fall back to the bottom of the channel at 105.85.