- The USD/JPY weekly chart shows indecision in the marketplace.
- Trump torpedoed G7 effort to ease tensions, still, global stocks may get a lift from the uptick in Chinese PPI.
- The pair could revisit 110.00 is stocks pick up a bid.
The battle is on between the USD/JPY bulls and bears, the back-to-back doji candles on the weekly chart shows.
Weekly chart
The long upper shadow of the last week's doji candle indicates the bulls fought to take the pair higher to and lost as the sellers pushed the price down again. Meanwhile, the previous week's long-tailed candle highlighted bear failure.
So, last week's high of 110.27 and the previous week's low of 108.11 will likely act as a key resistance and support levels.
The market does appear indecisive in 110.27-108.11 range. However, when viewed against the backdrop of the bearish outside-week candle, the bears appear to be in control, meaning the pair will likely find acceptance below 108.11 and extend losses to 107.32 (September 2017 low).
The G7 fallout does support the bear case. Risk assets (stocks) could remain on the defensive as G7 concluded in a deadlock on trade issues. Thus, JPY could pick up a safe haven bid.
However, China reported a better-than-expected the producer price index (PPI) over the weekend and that could put a bid under the stock markets. In this case, USD/JPY may revisit 110.00 (psychological hurdle) - 110.18 (200-day moving average).
If the pair manages to cross the 200-day MA, then the long-term descending trendline hurdle (drawn from August 2015 high and December 2015) could be put to test. Currently, the trendline resistance is located at 111.25.
A weekly close above that level would signal a bullish breakout (long-term bearish-to-bullish trend change).
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