USD/JPY retreats from 7-week high as Wall Street turns negative

• Yen gains momentum as US stocks turn negative. 
• USD/JPY trims gains, still above previous trading range. 

The USD/JPY lost momentum after the beginning of the US session and following US data (JOLTs job opening and Consumer Sentiment). The retreat from 7-week highs at 107.77 was driven by a decline in equity prices and a recovery in US bonds. 

The arrival of earnings season failed to impress markets. Also, focus remains on the potential US strike to Siria and the trade tensions between China and the US. Wall Street opened higher after President Trump spoke yesterday about a deal with China and open the doors to rejoin the TPP. Equity prices failed to remain on positive ground and erased gains. The DOW JONES was falling 0.25%, after losing 200 points from the highs. 

The decline in equity prices favored the yen and pushed USD/JPY to the downside. The pair recently dropped to 107.42, the lowest level since the Asian session. It was hovering around 107.50, still up for the day and headed toward the highest daily close since February 21 but the bullish tone eased. 

Technical outlook 

The short-term trend continues to point to the upside. A retreat significantly below 107.30 could put the pair back into the range of the previous four trading days when it moved between 107.40 and 106.60. A decline below 106.30 could signal that the US dollar peaked today. 

If the US recovers strength it could resume the upside in line with the main trend. Above 107.75/80, the next resistance is seen at 107.90 followed by 108.20.