USD/JPY drops 150 pips in two days, is the rally over?
|- USD/JPY continued to slide on the back of Trumps’ comments.
- US dollar retreated sharply from 6-month highs and bottomed below 111.50.
The USD/JPY pair was rejected again on Thursday from above 113.00 and dropped sharply. The move to the downside accelerated following Donald Trump comments about interest rate hikes from the Federal Reserve.
Late on Friday, Trump continued to speak against Fed rate hikes and USD/JPY extended the decline despite higher US yields. The pair bottomed at 111.38, the lowest levels since July 11. Near the end of the week was consolidating losses hovering around 111.50/65, down 160 pips from the weekly high.
Technical outlook
The reversal removed the positive short-term bias for the greenback and presents doubts about the rally that started mid-March. An uptrend line around 110.80 could be a key level: a consolidation below that level could signal that USD/JPY has peaked at 113.17.
If the US dollar rebounds, it needs to rise back above 112.00 to recover momentum while a solid break on top of 112.80/90 is needed to open the doors to more gains.
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