The Dollar/Yen collapsed yesterday as traders rushed to the anti-risk Yen after President Trump surprised the market with a new round of tariffs on Chinese imports, to become effective on September 1. Equities collapsed reverting strong initial gains while US Treasury yields fell further towards 1.87% for the first time since November 2016. The US President tweeted his disappointment towards Jerome Powell’s monetary policy, right after Wednesday’s FOMC meeting. Thus, yesterday’s tariff slap was a backlash towards the not-so-dovish Fed, adding pressure on Powell to cut rates more quickly and aggressively. Today’s NFP data will be essential to watch as weaker numbers would likely accelerate the fall of the US Dollar.
The Dollar bulls were crushed yesterday as the bears took complete control pushing price back towards the June lows, after successfully defending the 109.20 major resistance level. A break below 106.80 would accelerate further losses towards 106.50 and beyond. However, a break above 107.25 could temporarily halt this current bearish momentum.
Support: 106.80 / 106.50
Resistance: 107.25 / 107.55