Today we shall take a look at the USD/JPY pair. There is a clear shape to the chart, with the Japanese yen weakening until the signing of the trade deal between the US and China, followed by a steady bearish recovery for the past ten days.
Although 2020 began poorly for the Japanese yen, with some of the major sources of uncertainty fading (namely, the US and China reaching a preliminary trade deal, and the United Kingdom confirming it will exit the EU as scheduled on January 31), now the safety asset is strengthening once more. The reason for this is a new source of worry on the markets - the coronavirus epidemic in China. Because of businesses closing down and the government trying to limit people’s activity in order to contain the virus, the Chinese economy will suffer a blow, as will crude oil. In this environment, safe haven assets like the yen begin looking good again.
The American dollar remains strong, despite a few shaky reports last week. Overall, the economic situation in the United States is great. Investors do not see grounds to hope for an interest rate cut anytime soon, unless the US and China stop negotiating on the points of contention that remain after the phase-one agreement. However, right now the Japanese yen is just more popular among investors, which is why it is overtaking the dollar in this pair.
In terms of the daily chart, we have a pivot point for the pair located at 108.95, with the pair trading a bit below it currently. The support levels lie at 108.76 and 108.61, while the resistances are located at 109.11 and 109.29. The indicators of technical analysis recommend a strong sell position today.
