Geopolitical risks don’t seem to bother the markets anymore which supported the demand for the riskier USD and pushed USD/JPY up to 111.42 high.
The pair is poised to refresh July, 27 highs at 111.70. It looks quite possible if the markets keep their sentiment through the European session.
During the weekend Japan’s PM Shinzo Abe told he was considering calling a snap election in October. If so, political uncertainty may keep JPY under pressure in the short run. However, much will depend on US data. The more signs of slower US economy growth we get, the weaker is the demand on USD.
And under this scenario we don’t rule out the U-turn for the pair with initial target below the intermediate support at 111.00 followed by 110.70.
This week the traders will focus on FOMC and BoJ meetings.