The new trading week starts on the background of lower volatility in the FX market, as today in the USA is a day off; the country celebrates the life and achievements of Martin Luther King Jr., an influential American civil rights leader.
On Monday USD/JPY pair continues to displays positive market dynamic as the demand in Japanese currency decreased somewhat. In the middle of last week, global market sentiment has improved amid news that China and US are allegedly ready to do concessions in order to reach trade agreement. This is the news that supported USD/JPY by weakening JPY positions as demand for safe haven assets turned minimal. The demand for risk protective assets stayed on lower levels despite weak China data on economic growth. Earlier today the economic unit was announced that displayed the China GDP rate in 2018 was minimal for 30 years.
Today equity indexes retain positive sentiment as Japanese Nikkei 225 added 0.26% and China Shanghai Composite did even better adding 0.56%. Investors hope that China and US will manage to reach agreement that will a strong driver for equities providing demand for risks.
On the chart, the quotes are moving within the tight upward channel and near term outlook retain the positive dynamic for USD/JPY. The closest strong support is located around 109.40 mark, and the target might be in the 110.00 area. Once the market closes below 109.40 we can seriously view the possibility of deeper correction down to 108.60.
Trading recommendation –out of the market