Today we shall take a look at the USD/JPY pair. In December, the pair generally spent more days trading higher, around 109.5, but did not manage to push to 110. This week the movement is bearish once more.
There is currently nothing about the Japanese yen to encourage its strengthening. The economic situation in Japan is still one of recession, with inflation very far from the Bank of Japan’s ideal levels. In fact, the yen is not even benefiting from its status of a safety asset right now because the markets are not experiencing any strong uncertainty at the moment. So it is not that the Japanese yen is strengthening, as much as it’s the dollar weakening that is influencing the pair.
By all accounts, everything seems to be alright in the US economy and the US dollar is not under pressure. However, thanks to the positive developments in the trade negotiations between the United States and China, investors have a high appetite for riskier assets, thus ignoring the dollar at the moment. Because traders are eyeing other instruments, the USD has weakened.
In terms of the daily chart, we have a pivot point for the pair located at 109.02, with the pair trading below it currently. The support levels lie at 108.60 and 108.33, while the resistances are located at 109.29 and 109.71. The indicators of technical analysis recommend a strong sell position today.
