Fundamental OverviewThe USD came under somepressure on Friday as the risk-off sentiment caused by Trump’s threat ofsubstantially increasing tariffs on China weighed on Treasury yields. Over theweekend, we had more soothing comments from Trump and other US officials whichtriggered a recovery in risk sentiment. The positive mood weighed abit on the greenback but eventually the risk mood deteriorated again as USTreasury Secretary Bessent poured some cold water on the weekend hype and theChinese imposed special port fees on US related vessels as countermeasuresagainst the US previous port fees. Domestically, nothing haschanged for the US dollar as the US government shutdown continues to delay manykey US economic reports. The dollar “repricing trade” needs strong US data tokeep going, especially on the labour market side, so any hiccup on that frontis likely to keep weighing on the greenback. The market pricing shiftedmore dovish after the latest US-China escalation with 48 bps of easing byyear-end and 122 bps cumulatively by the end of 2026. The BLS announced lastweek that despite the shutdown, it will release the US CPI report on October 24,so that’s going to be a key risk event. In case we get hot data, wewill likely see a hawkish repricing in interest rates expectations with theDecember cut being priced out. Conversely, a soft report shouldn’t change muchin terms of pricing, but it will likely weigh on the greenback anyway. Thiswill of course be taken in context of the US-China relations by then. On the JPY side, thecurrency strengthened following the risk-off sentiment triggered by the US-Chinaescalation. Domestically, Takaichi is having some trouble securing enough votesto become the next Prime Minister after the loss of Komeito support. The votingis expected to take place next week. On the monetary policy side, nothing haschanged. Traders are assigning just a 18% probability of a rate hike at theOctober meeting given the political uncertainty and 33% chance of a rate hikeby year-end.USDJPYTechnical Analysis – Daily TimeframeOn the daily chart, we cansee that USDJPY eventually rejected the top trendline around the 153.00 handleand pulled back into the support zone around the 151.00 handle. There’s notmuch else we can see here but the buyers will likely continue to step in aroundthe support, while the sellers will look for shorts around the top trendline. USDJPY TechnicalAnalysis – 4 hour TimeframeOn the 4 hour chart, we cansee more clearly the recent price action with the pullback into the supportzone and the bounce following the positive weekend comments from Trump andother US officials. Bessent’s comments and the Chinese countermeasures triggeredsome risk-off again. USDJPY TechnicalAnalysis – 1 hour TimeframeOn the 1 hour chart, we cansee that we have a minor resistance zone around the 152.50 level. This is wherewe can expect the sellers to step in with a defined risk above the zone toposition for a break below the 151.00 support. The buyers, on the other hand,will look for upside breakouts to target new highs. The red lines define the average daily range for today.UpcomingCatalystsToday we have Fed Chair Powell speakingalthough he’s unlikely to change his stance given that we haven’t got anything newon the data front. For now, we know that only the US CPI will be publisheddespite the shutdown, which is scheduled for Friday October 24. This article was written by Giuseppe Dellamotta at investinglive.com.