USD/JPY sets two-week highs above 200-day MA on US-China trade talks optimism

• USD/JPY has hit the highest level since March 20 on US-China trade optimism and risk-on in equities.
• The uptick in the USD/JPY is backed by a rise in the 10-year treasury yield.

USD/JPY is currently trading just above the 200-day moving average (MA) of 111.42, having hit a two-week high of 111.53 a few minutes before press time.

The pair bounced up from the ascending 50-hour MA support earlier today and broke out of the sideways channel, signaling a continuation of the rally from recent lows below 110.00 after the Financial Times reported that the top US and Chinese officials have resolved most of the issues blocking the long-awaited trade deal.

The news put a bid under the futures on the S&P 500 index, pushing them higher by 0.4 percent. The major Asian equity indices like Nikkei, S&P/ASX 200, Kospi and Hang Seng are also flashing green. Meanwhile, the Shanghai Composite is trading largely unchanged on the day.

The anti-risk JPY, therefore, is being offered across the board. BOJ Deputy Governor Wakatabe's comments that inflation remains subdued globally may have added to the bearish pressures around the JPY. 

Looking forward, a sustained risk-on could yield further gains in USD/JPY. Supporting the bullish case is the 2.4 basis point rise in the US 10-year treasury yield.

Technical Levels