The yen rallied following U.S. President Donald Trump's overnight warning to North Korea that any threat would be met with "fire and fury." Trump was reacting to a Washington Post report that said the “rogue” communist regime had successfully developed a miniaturized nuclear warhead that could fit inside missiles.
Following Trump's warning, North Korea responded early Wednesday by saying it was contemplating launching a missile strike against the U.S. Pacific territory of Guam.
USDJPY plunged below the key psychological level of 110.00000 in Wednesday morning trade. The pair rebounded amidst a bout of profit-booking to last trade around 110.0500. 110.20000 represents the immediate upside resistance, from where a fresh wave of selling could emerge.
Depending on how North Korea reacts, USDJPY could be headed lower.