The fallout from the Comey memo spills into the US session, and the moves are huge. EUR/USD continues advancing but the moves in USD/JPY are huge.
Dollar/yen is below 111, a fall of over 200 pips on the day and more than halfway from the rally. The pair climbed from the trough of 108.10 all the way to 114.33 and now we are closer to the bottom.
This Comey story is bigger than previous ones and it lasts longer. The firing of the FBI Director seemed to begin fading away and to be surpassed by the disclosure of the classified information to the Russians.
But the most recent revelation is tremendous. According to Comey’s account, Trump asked him to let go of investigating Michael Flynn. The former National Security Advisor was deeply involved with the Russians including suspicions of collusion between the Trump campaign and the Russians.
This already amounts to an obstruction of the investigation, which was a significant theme in Nixon’s demise.
Markets and Trump
With the Administration gripped by the scandal, it will be hard to promote tax reform and infrastructure spending. Stocks markets are falling over 1%, a rarity in the low volatility environment.
The US dollar is also falling and the most evident pair is USD/JPY. The low so far is 110.89 with the pair struggling to recapture 111. Further support awaits at 110, a round number. The next support line is 109.50, where we have seen a weekend gap. The last line, for now, is 108.10, the cycle low.
On the topside, we find 111.60, a double bottom that was last seen a few months ago. IT is followed by 112.20. And then, we find 113 and 113.60. The pair pierced through these levels on the way down.
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