The Dollar/Yen closed little changed yesterday at the 110.10 area as equities fell undermined by fears of global economic slowdown will steepen on the back of mounting tensions between the US and China. Japan released the April Markit Services PMI, which missed market expectations, adding more negativity in the overall sentiment. Earlier today, President Trump said that China broke the trade deal and he vowed that he will not back down until China stops cheating US workers. His comments pushed the Yen higher and equities lower as trade tensions escalated. The next 48 Hours are very important regarding the trade issue, we expect a lot of volatility once the deal is finally resolved.
The US Dollar bears, after being held above the 110 area during yesterday’s session, broke below that level today heading towards 109.70 (S1). Market sentiment is very bearish and we could see more bearish momentum potentially taking price towards 109.50 (S2) and possibly even more if that level is broken. However, if the bulls break above 110.30, then they could stop this current bearish momentum and take price higher.
Support: 109.70 / 109.50
Resistance: 110.30 / 110.85