USD/JPY testing key support, Wall Street closed in the red, dollar firmer on tariffs, but not enough

• Markets turn risk-off as Trump announcing the proposed tariffs and start date.
• USD/JPY has been trading within familiar ranges but was down to test the key support level at 111.65.

USD/JPY has been trading within familiar ranges but was down to test the key support level at 111.65 on the trade tariff announcements and is currently trading at 111.77 from a high of 111.78. 

While markets get set for tomorrow's key event in the BoJ and next weeks FOMC, today was all about the possibility of Trump announcing the proposed tariffs and start date. This kept markets on edge, but the initial sentiment was that Trump may only impose 10% on the 200b$ of Chinese imports. The dollar was also a touch softer on investors considering a slightly dovish hike next week due to recent data misses and a softer CPI print. 

• Breaking News: US to impose $200 billion in tariffs on China from September 24th

Trump announces tariffs and dollars turns bid

Wall Street was closing in the red as President Donald Trump prepared to announce additional tariffs on Chinese imports while China hinted at a new round of retaliation. The yen strengthened to 111.66 on the announcements and had traded prior to those between a familiar 111.80/10 - EUR/JPY was off from 131.04 down to 130.31 and AUD/JPY 80.59 down to 79.79. 

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that the pair spent the day trading inside Friday's range, losing its upward strength but far from turning bearish, at least, according to technical readings in the 4 hours chart: 

"The pair is trading in a bullish pennant. In the mentioned chart, the pair remains well above its 100 and 200 SMA, while the Momentum indicator continued easing within positive readings, rather reflecting the lack of upward progress than suggesting lower lows ahead. The RSI indicator continues consolidating around 60, further limiting the bearish case."