The anti-risk Yen picked up some steam yesterday after German PMI decade-long weakness fired up recessionary fears once again in the marketplace. Earlier this morning, BOJ Kuroda was on the wires saying that he will ease without hesitation if chance that economy may lose momentum for achieving price goal heightens. The Yen, however, did not weaken on Governor Kuroda’s dovish talk, as there is a growing belief that the central bank has little room to provide more stimulus and any additional measure is unlikely to be effective. On the other hand, US equities has picked up a bid, as the bulls are trying to defend the 3000 mark on the S&P 500. If the momentum remains bullish on the US futures and the Treasury yields, then the Dollar will likely follow in today’s session.
The Dollar-Yen is currently trading in a channel after price broke down from the strong uptrend, which started since August 26. This channel could be considered as a bullish flag pattern where the buyers usually gather momentum before another leg up. However, in order to confirm this bullish narrative, the buyers need to break above the 50-day moving average. The sellers on the other hand, will attempt to push price lower towards the other end of the channel, which is around 107.
Support: 107.50 / 107.20
Resistance: 107.80 / 108.10