The USDJPY pair plunged 60 pips on Tuesday, erasing all the daily gains as US traders suddenly turned bearish on the greenback.
It is now falling toward the first stronger support near previous highs at around 109.70. If this level is not held by bulls, the short-term outlook could change to bearish, targeting the more meaningful support at 109.30.
Alternatively, if the first support holds, we could see a nice bounce as the medium-term trend remains bullish and dips are expected to be bought.
The resistance is at today’s highs of 110.50 and if broken to the upside, further rally toward 111 could continue.
As long as the US yields remain elevated. the greenback should be supported.