USD/JPY drops below 114 on North Korea headlines
The USD/JPY pair erased some of its daily gains in the late US afternoon and dropped back below the 114 handle on a fresh wave of risk aversion. As of writing, the pair was trading at 113.92, still up 0.6% on the day.
During an interview with Sky News, North Korean's UK Ambassador Kim Sung Gi said his country was ready to turn to "ashes" any available strategic assets of the United States, escalating the tension between the United States and North Korea. Safe havens like the JPY and Gold found demand after this recent development and retraced part of their heavy losses against the greenback.
However, despite that recent drop seen in the pair, the greenback strength continues to be the main driver of the price action. After rising to a fresh two-week high at 99.57 in the session, the US Dollar Index started to consolidate its daily gains and is now around 99.40, up 0.4% on the day.
- Yen is underperforming the majority of G10's, sentiment appears dominant - Scotiabank
On other news, U.S. Commerce Secretary Wilbur Ross suggested that the US Dollar was not too strong and other currencies were too weak. Ross also argued that a 3% GDP growth rate was not a realistic target as it would require the Trump's administration's tax, regulatory and trade reforms to be in place for several months to have an impact on the economy.
Technical outlook
The pair faces the immediate resistance at 114 (psychological level) ahead of 114.60 (Mar. 2 high) and 115.20 (Mar. 9 high). To the downside, supports could be seen at 113.00 (psychological level), 112.40 (100-DMA) ahead of 111.95 (May 3 low).
- USD/JPY bullish above 113.50 – UOB