Today we shall take a look at the USD/JPY pair. So far in November, the price of this pair has been climbing. However, it seems reluctant to test the 110 level and may rebound from a strong resistance soon.
The Japanese yen is behaving similarly to other safety assets at the moment. Over the past month, both China and the United States have expressed optimism about the possibility to reach a preliminary trade agreement (commonly known as the phase-one agreement). Chinese officials even suggested they might negotiate the rollback of some of the previously imposed tariffs, as China wants both countries to undo the duties they imposed on each other. These favorable developments have meant there is a higher risk appetite on the market and less interest in safety currencies such as the Japanese yen, hence the JPY’s weakening. Nevertheless, this week the tone of the US has changed a little, and with no official date to sign the agreement in sight, optimism might begin to wear off soon and bolster the yen again. On Thursday we expect the GDP report from Japan which will likely influence the pair strongly.
There are a number of important fundamental releases this week that will influence the American dollar. Tomorrow, we expect the CPI data that will show if inflation in the United States is growing again. Previously, inflation surprisingly decreased, which in turn prompted the Federal Reserve to lower interest rates in order to promote economic growth. If the CPI fails to meet the forecasts, this might mean a further dovish intervention is necessary. The retail sales (expected on Friday) will further confirm this and shape the course of the US dollar for the foreseeable future.
In terms of the daily chart, we have a pivot point for the pair located at 109.06, with the pair trading above it currently. The support levels lie at 108.87 and 108.71, while the resistances are located at 109.23 and 109.41. The indicators of technical analysis are confidently recommending a strong buy position.
