USD/JPY has rebounded to its 10-DMA at 107.43 today, close to the key tenkan and 50% Fibo at 107.47, but this recovery off key 106.47 Fibo support likely needs U.S.-China trade negotiations Thursday and Friday to at least push back U.S. tariff hikes scheduled for Oct. 15 and more in December. Expectations have risen since late last week for a partial trade deal and further talks in 2020 to tackle thorny structural issues.
Price action has been bullish since the Oct.
3 slide to 106.48 ran into strong bids above the 50% Fibo of the 104.46-108.48 August-September rise at 106.47.
Failure to close below the daily cloud top at 106.89 that day and the next three sessions and today's range above the cloud comes on decent Japanese bids and some covering of stale IMM spec shorts.
Those shorts were disappointed by 106.47 support not giving way.
Powell's speech yesterday has likely stolen the thunder from today's FOMC minutes.
A slightly more risk-on and USD/JPY bullish vibe derives from the Fed remedying dislocations in the funding markets. If USD/JPY closes above 107.47, September and October highs at 108.48/47 will be targeted.
If trade talks falter and 106.47 is broken, 106 will be the initial support.