The Dollar/Yen retraces for the second day leading bulls to worry that this might be a reversal rather than a retracement. The drop in the pair comes after the US Dollar started to weaken following Fed Powell’s dovish remarks during his speech Wednesday speech in New York. Powell claimed that rates in the US are currently “just below” the desired neutral rate, signaling that the Federal Reserve will most likely alter their rate hike plan to increase rates every three months. For today, the focus will be on the G20 summit as investors need to see if the trade tensions between the US and China will ease or escalate. An escalation in the trade tensions will lead to an increase in demand for safe haven currencies such as the Yen.
The Dollar/Yen is currently ranging between the 13-period moving average and the 50-period moving average which indicates indecision in the market. Depending on investor sentiment and the trade relations outcome of the G20 summit, the pair will either break above the 113.64 resistance paving the way for a rise towards 114.20, or break below the 50-period moving average at 113.32 leading the way for a drop towards the 200-period moving average and the 113.07 support level.
Support: 113.32/ 113.07
Resistance: 113.64 / 114.20