The USD/JPY pair extended its sideways consolidative price action on Wednesday
and remained confined in a narrow trading band around mid-107.00s. The pair continued with its struggle to make it through the key 50-day SMA pivotal resistance and witnessed a modest pullback on Tuesday amid worsening US-China relations. Diplomatic tensions between the world's two largest economies escalated further after the US President Donald Trump promised a strong reaction to China's planned national security law for Hong Kong.
China was quick to retaliate and threatened countermeasures against any US. This, in turn, provided a modest lift to the Japanese yen's perceived safe-haven status and kept the USD/JPY pair on the defensive for the second straight session on Wednesday. However, a goodish pickup in the US dollar demand helped limit any deeper losses, at least for the time being.