CHART OF THE DAY: Pressure Building within USD/JPY Wedge Pattern
The safe haven Japanese Yen weakened on Tuesday after the Chinese president adopted conciliatory stance in his speech on trade. Risk appetite was revived as Xi Jinping said his government would "significantly lower" tariffs on vehicle imports this year in an effort to further open China’s economy to the world.
Meanwhile, the US dollar was pressured by a disappointing jobs report on Friday. The data dampened expectations for four rate hikes from the Fed in 2018. Political unrest within the US and lingering trade war concerns continue to keep a lid on the greenback.
Gold prices have surged amid the possibility of a US military response in Syria and a weaker US dollar. Geopolitical uncertainty related to the conflict in Syria could also boost the Japanese Yen.
Looking at the 4 Hour USD/JPY chart we can see the price is confined within a well defined rising wedge pattern. The pattern appears in the context of a downtrend that began in November of 2017.
Major data ahead for the US dollar on Wednesday could provide the impetus for a breakout of the wedge pattern. The US Consumer Price Index (CPI) and FOMC Meeting Minutes are both due for release later on Wednesday.