The Dollar/Yen recovered yesterday following the global equity markets’ footsteps. But the weakening global growth could limit any major upside move for now. Earlier this morning, the Finance Minister stated that the government is not considering extra measures as the economy is not particularly bad at the moment. Aso added further that the global economy is recovering moderately, but cited trade issues and China's slowing economy as risks to the Japanese economy. The Yen gained a bit after Aso’s speech, due to investors’ shy risk-taking behavior. In economic news, the yearly Retail Sales and Industrial Production fell much below expectations to further escalate the negative market sentiment. And as for Tokyo CPI numbers, it shows no signs of any inflation.
The USD/JPY continued breaking higher yesterday until it reached our resistance level 110.85 (R1), just below the 200-day moving average. If this resistance level holds, we could possibly see price pulling back towards 110.40 (S1). If, however, the bulls successfully break above 110.85 (R2), then we could likely see a retest of 111.10 (R2).
Support: 110.4 / 110.15
Resistance: 110.85 / 111.1