Traders were rushed to the anti-risk Yen after US Fed policymakers increased the odds of a 50 bps Fed rate cut during the July 31st meeting. Adding to the risk aversion sentiment was the US-Iran, the US claimed yesterday to shot down an Iranian drone escalating the tensions between the two countries. Earlier this morning, market mood shifted to the positive side after the Federal Reserve Bank of New York mentioned that comments made by the President John Williams at the academic institute were not indicative of the US Federal Reserve’s future policy actions.
Traders may now keep an eye over the US Michigan Consumer Sentiment Index (July), in case the data didn’t disappoint, chances of the greenback to strengthen during the day will increase.
The Dollar/Yen pierced fiercely below 107.80 yesterday until it found support at 107.25 and bounced back strongly. The sentiment remains bearish as long as price keeps trading below the 50 and the 200-day moving averages. The bulls face a couple of major resistance levels to take out, 107.80 and 108.5 before challenging the moving averages. But the path of least resistance is towards the downside as the bears can retake control at any fading bullish momentum and retest the recent lows, 107.25.
Support: 107.55 / 107.25
Resistance: 107.80 / 108.05