The Dollar/Yen gapped up and continued surging earlier this morning despite a better than expected GDP numbers from Japan. Markets largely ignored the data, and instead are focused on the geopolitics, as US tariffs against Mexico are suspended after reaching a deal. As for the US/China stand-off, Treasury Secretary Steven Mnuchin did meet with People’s Bank of China Governor Yi Gang in the first meeting of high-level US officials in a month. Mnuchin described the meeting as “constructive” and “a candid discussion on trade issues”, although we have not had any further details from it than that. Risk-on mood is slowing coming back in the market, as Fed Powell relieved traders last week by hinting a possible interest cut in the near future, which soared the equity market back near to the top. The Yen will continue to be dropped in today’s session if sentiment remains positive and equities keep surging.
The Dollar bulls are attempting to break above a key resistance area 108.60s, which is also the 50-day moving average. A successful break above that level will send the pair towards 109. However, if the bears prove to be stronger and hold the line, then the buyers will likely lose momentum and price will decline back below 108.50.
Support: 107.77 / 107.50
Resistance: 108.65 / 109