The Dollar soared against the Yen despite equities collapsed yesterday after the US Central Bank’s decision was less-dovish than anticipated. Chair Powell hinted that yesterday’s rate cut wasn’t a start of a new easing cycle, but the market was already pricing in another rate cut by September. As a result, the divergence between the Dollar/Yen and equities will further confuse market participants in figuring out the appropriate risk sentiment. The Dollar bulls will probably remain in control for now but the upside potential will be limited on this pair if equities remain weak.
The Dollar bulls broke above a major resistance level, 109.20, during yesterday’s session, and currently they are testing the broken resistance for a possible new support level. If the bullish momentum resumes today and price took out the 109.30 resistance, it could squeeze out a lot of shorts which will likely accelerate gains towards 109.85. The bears, however, need to break below 109, in order to regain short-term control.
Support: 109 / 108.45
Resistance: 109.30 / 109.85