The Dollar/Yen drops as the yen gains following growing political tensions between the US and China. The yen gained as demand for the safe haven currency rose following heightened tensions between the US and China over the future of Taiwan. As a side note, the correlation between the pair and US stock indices have also broken down so Dollar/Yen investors need to focus less on US equity performance going forward. For today, the focus will be on any updates related to the political and trade dispute between US and China. Additionally, traders will need to monitor the ISM Manufacturing PMI figure as it will have an impact on the US Dollar.
The pair is trading around the 13-period moving average as a representation of the indecision between traders. Depending on the sentiment in the market relating to the dispute between the US and China, the pair will either attempt to break above the 113.08 resistance for the second time or break below the 13-period moving average and sliding back towards the 112.16 level.
Support: 112.72 / 112.16
Resistance: 113.08 / 113.78