The Yen continued to stay favored over the Dollar as risk-off sentiment persists following a prolonged trade spat between the US and China as US and Chinese officials exchanged insults over Huawei and trade in general. Further, the risk off sentiment sends equities and US yields lower aiding Yen’s rise as the 10-year treasury yield fell from 2.38% to 2.29%, the lowest since October 2017. The chance of a Fed rate cut by December, implied by Fed fund futures, rose from 100% to 130%. This dented the Dollar bulls’ mood, as more possible greenback weakness might be on the horizon.
The Dollar/Yen broke below the rising trend line, 110, and the 50-day moving average, as the bears took back full control of the overall bearish trend. Price is currently consolidating between 109.75 and 109.50, the possibility of a break below is more likely as price action is weak and market sentiment is bearish. The bulls, on the other side, need to break above 110 to regain control.
Support: 109.50 / 109
Resistance: 109.75 / 110.00