USD/JPY erases gains after US drops large bomb on Afghanistan

The yen gained momentum in the currency market after the US dropped the largest non-nuclear bomb of its arsenal on an ISIS tunnel complex in Afghanistan. USD/JPY erased gains and fell back toward 109.00. 

Currently, the pair trades at 108.98, marginally lower for the day. Before the Pentagon announced that the US dropped the “Mother of All Bombs”. It lost upside momentum amid a rally in Treasuries. US bond yields approached mutli-month lows. Equity prices in the US turned lower. The Dow Jones is down 0.45% and the Nasdaq declines 0.30%. 

The yen and gold rose during the last hours. EUR/JPY fell to 115.70 while GBP/JPY to 136.35, both hitting fresh 5-month lows.

USD/JPY Technical levels 

To the upside, resistance levels might be seen at 109.40 (intraday) followed by 109.60 (Apr 11 low) and 109.85 (Apr 12 high). On the flip side, support now might be seen at 108.90, 108.70/75 (daily low) and 108.50.