FxWirePro: Nikkei hits 3-month low on US-Mexico trade war, good to sell on rallies

Nikkei trades lower and hits 3-month low on renewed trade war between US and Mexico. US President Trump said that US will impose 5% tariffs on all Mexican imports from Jun 10th and duties up to 25% will be added in the coming months if Mexico does not take action to “reduce or eliminate number of illegal aliens”. US 10 year bond yield declined sharply and hits 20 month low of 2.19% and spread between US 3 month and 10 year yield widened to 18 basis point highest level since Mar 2019. The index hits low of 20671 and is currently trading around 20756.

On the higher side, near term resistance is around 21000 and any violation above will take the index to next level till 21145-200/21437/21600/21830 (61.8% fib).

The near term support is around 20750 and any convincing break below will drag the index down till 20500/20000.

It is good to sell on rallies around 21000 with SL around 21200 for the TP of 20530.