The Dollar gained some traction against the Yen yesterday as investors diminished the expectations of an aggressive rate cut from the Federal Reserve on 31st of July. Markets will be looking for clues from the FOMC minutes today, where Powell will testify to Congress for two-days. A divergence is forming between the US Equities and the Yen, as the stock market fell yesterday after rate hikes expectations dialed down, but traders didn’t rush to the anti-risk Yen courtesy of possible lower rates. Initial reaction after Powell’s probable less-dovish speech could push the pair higher, but the Yen will likely get stronger once the dust settles.
The Dollar/Yen broke above the 200-day moving average along with the 108.50 resistance level, pushing price higher potentially towards the previous multi-year support and current resistance, 109. Bears will have to protect that level at all cost to remain fully in control, or else the bulls will start to take over and possibly test 109.20 as their next target. The bears need to break back below 108.50 to stop this current bullish momentum.
Support: 108.50 / 108.15
Resistance: 109 / 109.20