The USD/JPY is the big mover-and-shaker on the forex today, trending south beneath the 108.00 handle. Not a whole lot of concrete reasons for the move are hitting the newswires, aside from a broad-based rally in safe-havens. Gold is back above 1400.0 and the USD/CHF has fallen to the .9850 level ― it appears that the G-20 honeymoon for the USD is over.

Earlier today, FED members Mester and Williams issued public commentary on the current state of the U.S. economy. In short, lagging inflation, international trade, Brexit, and growing tensions in the Middle East are driving uncertainty.

Ultimately, the term “uncertainty” is growing in popularity among FOMC members and looks to be the new FED theme. This isn’t great news for the Greenback as “uncertainty” typically means the FED will take its time in implementing any dramatic policy moves. For now, it is more “wait-and-see” talk from the FED. 

USD/JPY Plunges Beneath Daily Support

The USD/JPY has been on a tear south today, taking out the 108.00 handle. At press time (1:30 PM EST), the action continues to favor the bears, with rates off more than 40 pips on the session.

USD/JPY, Daily Chart
USD/JPY, Daily Chart

Here are a few key support and resistance levels to keep an eye on:

  • Resistance(1): Bollinger MP, 108.17
  • Support(1): Daily SMA, 107.90

Overview: In addition to these two levels, the weekly opening GAP (108.10 – 107.90) has been an important technical area in this market. GAPs are generally filled in ― today’s action in the USD/JPY is a prime example of this concept. Neglected price points are being actively traded as the market attempts to define fair value.

From a technical standpoint, the Daily SMA (107.90) is a critical support level in this market. If we see the USD/JPY rebound to settle above 108.00, then a bullish bias is warranted going into Wednesday’s session. If not, rates are very likely to trend south, possibly challenging the daily Swing Low (106.78) by Friday’s closing bell.

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