The Yen was favored over the greenback in yesterday’s session as the US-China trade escalation continues to dent the risk sentiment, as reflected by negative Asian equities and Treasury yields. The US adding few more Chinese companies to its blacklist and turning down Beijing visit for trade talks, shows that the trade dispute remains far from any solution, adding additional weight on the market risk sentiment. Moreover, political plays at the UK also plays a major part in risk sentiment, as the British lawmakers prepared for a coup to remove PM May over her failure to deliver an appropriate Brexit proposal. Looking ahead, the US Markit manufacturing and services PMI could offer traders some directional clues in addition to political headlines during the rest of the day.
The Dollar/Yen pulled back from the 110.60 resistance and found support around 110.30, as the bears and the bulls are fighting to take control. The bulls are currently in control in this short-term counter trend so a bounce towards 110.60 for a retest is likely, a break above it however, could push price higher towards a major resistance level 111. The bears, on the other hand, need to break below 110 to regain control.
Support: 110.30 / 110
Resistance: 110.60 / 111.00