The yen rose sharply against the US dollar yesterday after the interview between the WSJ and Donald Trump. The US President said that he likes “low rates” and that he doesn’t think now, that China is a currency manipulator. The greenback fell sharply and extended the decline during the Asian session. Then it managed to stabilize and pushed USD/JPY back above 109.00. The recovery of the pair found resistance at the 109.40 area and then dropped modestly after US dropped a large bomb on Afghanistan to an ISIS complex.
The risk aversion sentiment boosted the yen in the market, that hit multi-month highs versus the pound and the euro. The Japanese currency remains strong from a fundamental and technical perspective. The dominant trend points to the downside, but during the last hours, the short-term pressure eased after bottoming at 108.70. A recovery above 109.40 would add more strength to the US dollar, while a consolidation below 109.00 would expose April’s lows and could trigger a resumption of price action moves in line with the main trend.
On Friday, despite the holiday, in the US, relevant economic data will be released: CPI and retail sales. A low liquidity environment is expected, favoring erratic moves in the pair. Normality across financial markets is not expected to return until Tuesday.
Support levels: 108.90 108.70 108.30
Resistance levels: 109.40 109.80 110.10