USD/JPY: US-China trade discussions and Daly’s comments maintained 110+

• The USD/JPY remains around 110.50 before the Asian markets start on Monday.
• Welcome developments during the US-China trade talks and a Fed official’s comment indicating no rate-hike in 2019 supported risk-on.
• The 110.25 may offer immediate support to the pair while 111.30 being nearby resistance.

The USD/JPY pair held at 110.50 before the Asian markets open on Monday. The pair closed in the positive territory for second consecutive week mainly on the news that the US and China agreed to continue talking the business in Washington whereas the US President Donald Trump is also likely to extend March 01 deadline. Adding to the risk sentiment was comments from Federal Reserve Bank of San Francisco official Mary Daly that turned down chances of any rate hikes during the year 2019.

The US delegates flied back from China on late-Friday with positive statements from both the sides conveying good progress on the talks without giving much of the details. However, speculations that Trump may extend March 01 deadline for the talks after signaling a 60-day window to re-introduce tariffs on China past-deadline helped boost market’s risk sentiments.

On the other hand, the director of research in the Economic Research Department of the Federal Reserve Bank of San Francisco, Mary Daly, was quoted indicating no rate-hikes expected during the year 2019 to WSJ by the by the Westpac Institutional Bank. As a result, easy money lovers kept being happy and showed their risk-on moves.

There was a mixed feeling from the news that the US President signed a bill to avoid another government shutdown in return of a paid fencing on a border surrounding Mexico. Though, his declaration of national emergency after signing the bill to fund the wall surprised investors.

Looking forward, the US markets are close on Monday in observance of Presidents' Day, which in-turn may give a halt to developments surrounding the US-China trade talks before both the sides resume talks in Washington this week. Meanwhile, Japan’s December month core machinery order may also play their role. The order growth is likely to decline by -1.1% after registering no growth at 0.0% during previous month.

USD/JPY Technical Analysis

USD/JPY rests near the 50-day simple moving average (SMA) level of 110.25, making it the immediate support, a break of which can drag the quote to 109.80 and then to an upward sloping trend-line at 109.40.

Alternatively, successful break of 111.30, including 200-day SMA, becomes necessary for the pair to aim for 111.80 and 112.10 numbers to north.