USD/JPY tumbles below 107.30 to the lowest in three weeks on Fed’s comments
|- US Dollar tumbled following comments from Fed’s Williams and Clarida, signaling to a rate cut.
- Support to the Yen from lower US yields, partially offset by a rally in Wall Street.
The USD/JPY pair was moving slowly to the downside during the American session, but then it speeded up, falling from 107.75 to 107.22 in a few minutes, reaching the lowest level in three weeks.
Comments from two Fed’s officials pointing to a rate cut at the next meeting triggered a broad sell-off of the US Dollar. It also sent US yields to the downside and pushed equity prices in the US back into positive territory.
Williams mentioned that preventative measures on interest rates are better than to wait for a disaster. After his comments, Fed's Clarida said that is it not positive to wait until economic data turns decisively negative to act.
USD/JPY Technical outlook
Valeria Bednarik, Chief Analysts at FXStreet, points out the pair is heading into the Asian session trading near the lows, technically bearish according to the 4 hours chart, “as the pair continues developing below all of its moving averages, and with the 20 SMA gaining bearish traction below the larger ones.”
The Momentum indicator in the 4 hours chart “has extended its decline within negative territory, while the RSI turned sharply lower, all of which maintains favors further slides ahead”, added Bednarik, signaling a potential target at 106.77, June’s low.
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