The Japanese yen soared slightly against the U.S. dollar on Wednesday, resuming its rebound from a 7-1/2-month trough, amid some deterioration in risk sentiment as the U.S. intends to hold tariffs on Chinese goods until after November.

The USDJPY is currently trading lower at 109.94 after hitting a low of 109.81, resuming retreat from yesterday’s peak of 110.21, the highest since May 23, 2019.

As shown in the previous chart, the USDJPY rose to retest the long-term downtrend, which has been dominating the pair’s movements since 2015.

While the signing of the phase-one trade agreement, expected on Wednesday in Washington, should have improved the risk sentiment, concerns were revived after U.S. Treasury Secretary Steven Mnuchin told reporters Tuesday that tariff cuts would be considered as part of a phase-two agreement with China.

Also, U.S. President’s Administration is meanwhile setting rules disallowing more sales to Chinese Huawei Technologies.

Hence, it seems that the tensions between the world’s biggest economies would extend beyond the signing of the phase-one trade pact.

The yen snapped some of its gains after Bank of Japan Governor Haruhiko Kuroda said on Wednesday the central bank will not hesitate to ease monetary policy further while making alterations as necessary to reach the 2% inflation objective.

Kuroda gave some remarks ahead of the January 20-21 monetary policy meeting at which the BOJ is predicted to slightly revise up its economic forecasts for the fiscal year debuting in April.

Given a positive output gap and rises in inflation expectations, Kuroda estimates acceleration in inflation towards targets, but hinted to negative impact from the latest declines in oil prices.

Asian stocks plummeted today, while safe havens, most notably gold and Swiss franc managed to gain some ground.

The U.S. dollar index was little changed trading at 97.10, ahead of U.S. PPI, Empire State manufacturing index and comments from FOMC members Harker and Kaplan.

The dollar faced some downside pressure on Tuesday after the consumer prices showed a minor 0.2 percent increase in December, thereby endorsing views the Fed would hold borrowing cost until the end of this year.