The Dollar/Yen is getting stronger leading into Powell’s testimony in today’s session, after Philadelphia Fed President Harker said that he doesn’t see a compelling reason to cut interest rates given the strength of the economy and that he projected no change in rates this year. Treasury yields rallied after the strong growth in NFP in June but equities are still fully priced for a 25bp rate cut at the July FOMC meeting. In other news, while the global markets have focused on the trade war between the US and China, trade tensions have also been rising between Japan and Korea, which is a positive for the Yen if tensions escalate further.
The Dollar/Yen is currently testing a major multi-year support, recently turned resistance, 109. If the bulls manage to break above it, it could change the overall sentiment to the buyers’ side, and their next challenge will be to take out 109.20. However, if the bears show resiliency, then price could roll over and retest 108.50.
Support: 108.50 / 108.15
Resistance: 109 / 109.20