USD/JPY: traders await Xi's key note speech

• USD/JPY mixed ahead of key note speech from Xi, headed to 106 the figure? 
• USD/JPY dropped Wall Street session gains on politcal drams from White House again.

Following a turbulent and two-way traffic day on Wall Street, USD/JPY has started out in Tokyo mixed as markets await what might come of Xi's speech. Currently, USD/JPY is trading at 106.72, down -0.04% on the day, having posted a daily high at 106.82 and low at 106.62.

As traders walked into NY, the yen was offered vs the dollar initially on the trade war headlines, testing 107.20, (cloud base and 55-DMA at 107.19.22).

There were signs that Trump may have softened his approach in a trade spat with China when on the weekend, he tweeted:

"President Xi and I will always be friends, no matter what happens with our dispute on trade. China will take down its Trade Barriers because it is the right thing to do. Taxes will become Reciprocal & a deal will be made on Intellectual Property. Great future for both countries!"

So what happened on Wall Street?

The NASDAQ was leading the way while markets get set for Facebook’s Zuckerberg to appear and apologize before Congress on Tue and Wed. The S&P 500 jumped by as much as 1.8%. However, late headlines that President Trump’s personal lawyer had been raided by the FBI set investors running for cover and the yen picked up a bid and rallied to back below the 107 handle to make a fresh low. The US 10yr treasury yield dropped to 2.78% in NY. The next key event will be the US CPI on Wednesday.

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that the pair headed into the Asian session with a sour tone:

"despite holding above its moving averages in the 4 hours chart, technical indicators have entered negative territory with strong downward slopes. The immediate support is Friday's low at 106.77, with a break below it favoring a continued decline towards the 106.00 level, particularly if risk aversion takes its toll on equities."