- The greenback was on the backfoot overnight on the comments from the People’s Bank of China declaring that the yuan would be stable.
- USD/JPY edged lower from session highs at 111.13 to close below the 111 handle.
- Weaker US treasury yields added to the weakness in the pair. US 10yr treasury yield fell from 2.88% to 2.83%, while 2yr yields fell from 2.56% to 2.53%.
- The pair is extending declines on the day, trades 0.10% lower at 110.46 after hitting lows of 110.28.
- Technical indicators are turning slightly bearish. Stochs are on verge of rollover from near overbought levels.
- We also see bearish divergence from price action on daily RSI and Stochs.
- Immediate support lies at 21-EMA at 110.23. Break below will see test of 23.6% Fib at 109.80.
- On the flipside, the pair is struggling to close above 111 handle. Any further upside only on decisive break above.
Support levels - 110.23 (21-EMA), 110, 109.80 (23.6% Fib)
Resistance levels - 110.61 (5-DMA), 111, 111.13 (July 3rd high)
Recommendation: Watch out for break below 21-EMA for further weakness.
FxWirePro Currency Strength Index: FxWirePro's Hourly USD Spot Index was at -49.069 (Neutral), while Hourly JPY Spot Index was at -48.5132 (Neutral) at 0415 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.
