Last week's inverse head and shoulders did not play out, although USDJPY came very close to breaking the neckline of the pattern several times. The pair posted a loss last week with a bulk of the decline on Friday on the back of an escalation in the US/China trade war.

Friday's price action was typical risk off with gold, yen, and bonds are rallying together. Some of this sentiment has continued into the weekly open, probably as a result of some tweets sent out after market close on Friday by the US president.

Price action this week will be important, mostly because of correlations. To start, a further sell off in risk assets would (likely) mean a downside break in the S&P 500 that has been playing out for most of the month. And that kind of break would signal a more prolonged episode of risk aversion.

For now, we are looking for 104.64 support to hold in USD/JPY. This marks the 2018 low. So far, an early day rally was already capped at 105.73 and this remains resistance. It may require a catalyst to for a break below support here, and in the absence of one, it is likely a range develops.

For more analysis on risk assets, please visit The Gold Analyst