Today we would take a look at the USD/JPY currency pair, which is one of the most popular assets among traders. After managing to break through the older channel in early April the dollar has continued to rally and push the price further upwards.
The rally of the USD is still based on good economic statistics. Furthermore, the likelihood of an interest rate increase by the Federal Reserve is growing by the hour. There have been statements by various Fed officials over the past days, and even the most dovish among them seem to lean towards a rate increase. Today the Federal Reserve chief Powell is set to give a speech in Zurich, which will likely have a major impact on the dollar’s rate. We are also expecting a report on inflation this week which is likely to be above 2%; that will further confirm an upcoming rate hike.
Meanwhile, there are no major factors from within Japan that can strengthen the yen, so it is likely to continue dropping. There is one thing that could help it get back on its feet, however: the insecurity on the markets caused by the Iran nuclear deal. Trump has not renewed it yet and the deadline is fast approaching (this Saturday). In times of trouble investors typically turn to the Japanese yen, so it might put up a fight and resist the dollar this week.
In terms of the daily chart today we have a pivot point for the USD/JPY pair located at 109.04. We expect the pair to remain bullish for now, so pay attention to the nearby resistance levels at 109.32 and 109.68. If the pair drops below the pivot, then look for the support levels at 108.68 and 108.40. The indicators of technical analysis unanimously agree on a strong buy signal.
