📝 U.S.-China Trade Talks in Focus – Watch the Headlines

📝 U.S.-China Trade Talks in Focus – Watch the Headlines

“Dollar rally fades as markets turn cautious in a data-light environment”

📰 Market Overview

The Tokyo session opened with a retracement of last Friday’s dollar strength, driven by profit-taking following the U.S. jobs report.
Additionally, reports of civil unrest in Los Angeles over immigration issues sparked some risk-off sentiment.

Equity markets remained firm, both in Japan and China.
In China, weak inflation data further fueled expectations of monetary easing, supporting overall market stability.
Today, the U.S.-China trade talks are scheduled to take place in London.
With the G7 Summit approaching this weekend, the outcome of these talks could significantly shift risk sentiment—either toward risk-on or risk-off.

There are no major economic releases today.
Markets are likely to stay in wait-and-see mode ahead of the U.S. May CPI release on Thursday, which is critical in shaping expectations for the Fed’s next move.

📌 Today’s Key Watchpoints

• U.S.-China trade negotiations in London → headline risk

• New York Fed Inflation Expectations (May)

• U.S. Wholesale Inventories (Final – April)

• Mexico May CPI → may influence MXN crosses and commodity-linked currencies

💬 Trading Strategy Notes

With the impact of the U.S. jobs report mostly priced in, the focus shifts to two key events:
U.S. CPI on the 13th and the G7 Summit starting the 15th.

Markets are likely to remain reactive to headlines.
Traders should keep positions light and short-term focused.
For USD/JPY and yen crosses, the technicals currently favor selling into rallies.

💵 USD/JPY

• Daily: Struggling to break above the 5-day MA (~143.70).
   Support at Bollinger mid-band (~142.60).

• 15-min: Heavy sell orders around 144.00.
   Support at 143.30.

• RSI (Daily): Around 48 (neutral), with slight downside tilt.
  Strategy: Consider short positions near 144.00–144.30.
   If price drops to 142.60–143.00, look for a confirmed rebound before reentering long.

💶 EUR/USD

• Daily: Pulled back from the recent high at 1.1495.
   A break below 1.1400 would be a cautionary sign for trend reversal.

• 15-min: Sideways around 1.1440; short-term moving averages starting to form a bearish crossover.

• MACD (4H): Bearish crossover active; downside bias remains.
  Strategy: Favor selling into rallies at 1.1440–1.1455.
   A break below 1.1400 could mark a short-term trend shift.

💷 GBP/JPY

• Daily: Attempted to rebound off 193.20 but failed to hold.
   Support likely around 192.00.

• 15-min: Key level at 192.50; resistance remains at 193.30.

• Bollinger Bands: Bands are narrowing, suggesting energy buildup.
  Strategy: A break above 193.00 favors longs, but a drop below this level may prompt dip-selling down to 192.00.

⏱ Additional Notes

• No clear trend expected before CPI; market will likely remain range-bound and headline-driven.

• Manage tail risk carefully → consider tighter stops or manual monitoring.

• JPY pairs are particularly sensitive to central bank commentary and geopolitical headlines (G7, U.S.-China).