USD/JPY erases gains as US withdraws from the Iran deal

• Yen gains momentum after US withdraws from the Iran nuclear deal.
• USD/JPY hits fresh lows and rises back to 109.00.

The yen rose across the board after US President Trump announced the withdrawal from the Iran nuclear deal. USD/JPY dropped from 109.15 to 108.81, reaching a fresh daily low. Then rebounded as the USD recovered momentum and it was trading at 109.00/05, near the same level it closed yesterday.

US President Trump pulled the US out of the Iranian nuclear deal and re-impose sanctions. French President Macron said “France, Germany, and the UK regret the U.S. decision to leave the JCPOA. The nuclear non-proliferation regime is at stake.”

The USD/JPY pair continues to move sideways near the 109.00 area. It is consolidating after a pullback from 110.00. PPI data in the US is due tomorrow and on Thursday, CPI.

Levels to watch

On the downside, a consolidation below 108.80 would clear the way for a test of 108.50/55. Below, support levels might be seen at 108.25 and 108.00. On the upside, immediate resistance is seen around 109.10 followed by the strong 109.40 area (upper limit of current range) and 109.70.