USD/JPY touches a low of 110.68 on the day
The Japanese Q2 preliminary GDP beat earlier in the day gave the yen a good reason to climb, but those gains extended later on as the lira fell. There is word that TRY/JPY stop-losses were triggered, and that led to further declines in the lira while helping to push up the yen a little in the last hour.
Nonetheless, USD/JPY is now testing the support from the 31 July low @ 110.75 and yesterday's low @ 110.71. Sellers remain in control in the near-term as price failed to break above the 100-hour MA (red line) earlier in the day with the trendline resistance providing an additional area for sellers to lean on.
Right now, the key thing to look at is how the pair will perform towards the end of the day and whether or not we will see a daily close below the 110.85 level which has helped to support the pair in recent times:
Move below and that will give sellers more conviction to attempt to drive price lower. But stay above and we're basically closer to finding a bottom/base for the pair and that will convince buyers to enter back into the fray.
There is additional support from the February high @ 110.48 near the 110.50 level so that will be another area to look at today should the pair break lower. If that fails to hold, the next key level is the 110.00 figure level and the 200-day MA (blue line) sits nearby @ 110.97.
Concerns surrounding emerging markets is also another factor to consider moving forward with regards to yen strength, particularly if they start to spill over to more developed markets. The ECB has come out to say that it is concerned by the depreciation in the lira and the impact it will have on regional banks' credit due to their exposure. Specifically, they highlighted BBVA, Unicredit, and BNP. While this may not be an issue just yet, it very well could develop into something more if there is continued declines in the lira from hereon.
