Dollar Yen breaks lower
Dollar/Yen (USDJPY) had an interesting day yesterday, shedding almost 100 points on the day and closing well below the interim support at 109.70. This holds out the prospect that it will shortly again visit that level and how it reacts will be significant. The failure of the rally in Mid-April has set the tone for this decline, but it does seem to have gathered some momentum yesterday. We’d expect it to try yesterday’s high, fail, and then look to support around 109.00. We don’t expect the support here to be particularly robust and that further losses are indicated, maybe as much as 200 points before it sets up some sort of rally, but that any closure above 109.80 might give us pause for thought. Overall we’d prefer to build shorts in any rally and take some profits around 109, but ultimately would expect to see it drift off as dollar sentiment appears a little weaker than a few weeks ago.