• Escalating tension between the U.S. and China
  • USD/JPY 107 handle breached
  • Triple bottom spotted

USD/JPY took a nosedive yesterday, breaking below the key level of 107 due to the weakness of USD caused by the deteriorating political tension between the U.S. and China after the U.S. Justice Department indicted two Chinese nationals of espionage, accusing them of stealing data of weapons designs, drug information, software source code and personal data.

The Japanese manufacturing sector showed slight improvement as contraction slows down in July after lockdown measures have been eased.

At the moment, we are seeing the formation of a triple bottom for USD/JPY on the H4 chart. It will be a herculean task for this pattern formation to play out amid the political tension between the U.S. and China. Moreover, USD/JPY will soon be faced by the challenge of breaking above the key level of 107 before standing a chance to recoup its recent losses.

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By Gim Hong Lee

Gim Hong has been a full-time currency trader for more than 2.5 years, focusing on day and swing trading of major currencies and their crosses. He is a frequent contributor of currency and economic analysis in Forex Trading Asia. Graduated from Columbia University in the City of New York with a bachelor’s degree in applied mathematics and statistics, the nerdy side of Gim Hong enjoys learning about data analysis, machine learning and their applications in currency trading.

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