USD/JPY bears taking control in thin trade as US dollar remains under pressure

• USD/JPY feeling pressures as US dollar remains the laggard in thin trade.
• USD/JPY technical indicators remain within positive levels as a US/Sino trade deal remains on the horizon. 

USD/JPY is under pressure in Tokyo during thin trading conditions with the yen picking up a bid across the board for little rhyme nor reasons. USD/JPY has fallen to a low of 109.36 from a high of 109.47 so far. 

USD/JPY has struggled to hold in bullish territories in the 109 handle with repeated failures in recent sessions through the 109.60s. The US dollar came under pressure last week and was the laggard across the board into the closing session Friday which saw US stocks run-up higher record highs, yet the yen is bid in Asia today.  

• US dollar bears in control, looking to a 78.6% Fibonacci retracement target in 96.60s

As explained in the above article, following an outsized bearish pin-bar on Christmas day, the US dollar index, DXY, dropped to test the 97 figure again with a lof of 96.92. The outlook, from a technical basis, remains bearish for the week ahead with the price on Friday closing below the double bottom support levels of 18th Oct. and 1st Nov. lows of 97.12/10 respectively. A 78.6% retracement brings in the 96.60s as a downside target for the week ahead.

• China ‘will honour’ US trade war deal promises as talks progress ‘in earnest’ – SCMP 

Meanwhile, moves can be erratic at this time of year and it is prudent to wait for full markets to return in the New Year where fundamentals will be back in play, especially with a focus on global trade and geopolitical themes.  The weekend headlines were positive in this respect whereby an article in the South China Morning Post indicated that the Chinese will 'honour' US trade war deal promises as talks progress in 'earnest'.

USD/JPY levels

Valeria Bednarik, the Chief Analyst at FXStreet, explained that the "USD/JPY pair has been hovering around the 109.50 price zone for over two weeks now, neutral yet bullish as it holds around December high at 109.72."

The daily chart confirms so, as the pair is developing above all of its moving averages, while technical indicators remain within positive levels. In the 4-hour chart, the pair is also neutral, as it is stuck around a flat 20 SMA but holding above the larger ones, as technical indicators ease modestly around their midlines, without enough directional strength.