The Dollar recovered against the Yen yesterday as positive sentiment lifted the US equities and the government bond yields, sending traders away from safety and further into riskier assets. However, earlier today the Chinese State media stated that China has no interest for trade talks with the US, reversing the pair to the downside as market participants flee to Yen once again. On the macroeconomic front, Japan released Tertiary Industry Activity index missing market expectations, adding more negativity on the overall mood in the markets. Today, after China’s trade comments, traders will anticipate a possible answer from the US which could be today’s main market driver.
The USD/JPY touched 110 and got rejected as the bears take back control by ending this short-term counter trend. The sellers will be looking to break below 109.40-50 level to confirm further weakness towards the recent low 109. A break below that level, would open doors for more losses towards the a major support level 108.50. The bulls on the other hand, will need to hold the 109.70 level to gather momentum to retest the 110 resistance level.
Support: 109 / 108.50
Resistance: 109.70 / 110