Yesterday’s recovery lacked any follow through, as the Dollar/Yen declines further ahead of the European opening. The pair remained under pressure as China kept entertaining Yuan weakness, spreading fear of a global economic recession. Also adding to the sentiment could be the BOJ’s favor for easy monetary policy, along with the geopolitical tension surrounding Iran and Turkey could also add strength to the bears. Given the on-going trade pessimism surround the US and China, markets can witness a further rise in the safe-haven demand, which in turn signals additional strength in the anti-risk Yen.
Yesterday’s bullish momentum faded away this morning as the pair is currently attempting to retest the recent lows. If the bears successfully break below 105.85, then 105.50 will be their next target. If the bulls manage to hold 105.50 and print a potential double bottom, then we expect a short-term recovery on this pair taking it higher. But in the event the bulls fail to defend that level, then further weakness could accelerate the losses by taking the pair much lower.
Support: 105.85 / 105.50
Resistance: 106.50 / 106.80