The US Dollar advanced over the Japanese Yen after a strong demand for the greenback across the board as traders are anticipating a 25 bps rate cut by the Fed instead of 50. Additionally, White House Economic Advisor Kudlow is hopeful on US-China trade talks, after Beijing promising to buy US agriculture products fueled optimism in the market place. The 10-year Treasury yield also recovered, alongside the US equities to confirm the recent strength on the pair. Earlier this morning, Japan released a weaker than expected Manufacturing PMI data showing that the economy is still in a contraction mode, which created a temporary reaction in the market favoring the anti-risk Yen. However, the Dollar strength is expected to resume today as positive market sentiment prevails.
The US Dollar broke above the bearish trend line, the 50 and the 200-day moving averages, signaling a strong bullish reversal on this pair. The bulls are currently retesting 108.10 (previous resistance, new support) after facing a resistance at 108.30. The buyers need to regain momentum and push price beyond 108.30 for a possible 108.60 retest. If however the bullish momentum fades away and price breaks below 108.10, then the bears will take over in the short-term, pulling the price back towards 107.80.
Support: 108.10 / 107.80
Resistance: 108.30 / 108.60