USD/JPY broke below 109.50 and dropped to 109.31, reaching the lowest level since June 14. The pair remains near the lows, under pressure amid a weak US dollar and risk aversion.
USD/JPY looking at June lows
To the downside, below 109.30, the next support level might be seen at 109.10 (June 7 low) followed by 108.80 (June low). In order to remove the current bearish pressure, the US dollar needs to rise back above 110.00. Before that level, the area around 109.50 is now a resistance.
The short-term momentum and the trend continue to be clearly bearish. USD/JPY appears to be looking for a new support. A daily close around current levels would be the lowest since mid-April.
JPY supported by data and risk aversion
The yen gained momentum after the release of the US July PPI. The index decline 0.1% against expectation of a 0.1% gain. It was the first negative reading since August 2016. US bonds yields dropped after the report and boosted the yen in the market while at the same time weakened the greenback. Lower inflation reduces the expectation of another rate hike from the Federal Reserve during 2017.
US: Despite soft PPI, fundamentals point to firm inflation ahead - Wells Fargo
The Japanese currency received another boost during the American session with the slide in US equity prices. The Dow Jones is falling 0.46%, at 21,947 (1-week low) while the Nasdaq drops 1.05%.
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