USD/JPY: Sellers are back as Tokyo open reassesses trade war respite

• Chinese media adds fuel into the recently silent US-China trade war.
• Geopolitical tension surrounding Hong Kong and the Middle East also favor risk-off.
• BOJ’s Summary of Opinions remains tilted towards the easy money policy.

USD/JPY buyers can’t be happy for long as the pair drops to 106.22 on Wednesday’s Tokyo open.

The quote benefited from China’s scaling back the currency from record lows against the US Dollar (USD). Adding to the risk-on mood were market talks that the US still hopes of altering the latest tariffs ahead of meeting China during early September.

Investors again turned risk-averse during early Wednesday as China’s press noted that Huawei is developing its own solution to the US restrictions while also showing the dragon nation’s readiness for new tariffs from the US. On the other hand, China indirectly shows the firm stand to punish all those who challenge its dominance in Hong Kong

Also dragging the risk tone are Fox News and Sputnik reports that Iran’s President warns of war and a damaged US stealth fighter spotted over Syria respectively.

It should also be noted that the Bank of Japan’s (BOJ) latest Summary of Opinions reiterated the central bank’s support for easy money. It also cited the readiness to respond quickly to offshore risk.

With this, the US treasury yields for 10-year maturity fail to hold the previous recovery and slumped back below 1.7% to 1.682% by the time of writing.

Technical Analysis

Latest low surrounding 105.52 holds the key to the pair’s drop to January low near 104.75 while an upside clearance of June low around 106.78 can trigger fresh recovery targeting mid-July low close to 107.20.