‘Unlike the dollar and treasuries, the ‘Trump trade’ still had an impact on equities. But if such impact on equities is to fade, it would weigh on dollar/yen. The dollar will also suffer against other currencies as U.S. yields would decline.’ – Barclays (based on Reuters)
Pair’s Outlook
Risk-aversion was driving the markets yesterday, causing the USD/JPY pair to drop for the sixth consecutive day. The Buck dropped 85 pips, which was just sufficient to close below the 11.75 psychological support, not to mention the breach of the ascending channel pattern. The US Dollar is now likely to keep edging lower, with the nearest support being around 111.30, formed by the lower Bollinger band and the monthly S1. However, according to the RSI indicator, the Greenback is poised to make a U-turn soon, with today expected to be the last day of a nearly 400-pip slump.
Traders’ Sentiment
Although not as strong as yesterday, but market sentiment remains bullish at 64% (previously 68%). Meanwhile, the share of purchase orders inched higher, namely from 59 to 62%.
