Today we would take a look at the USD/JPY currency pair, which is one of the most popular assets among traders. After being stuck in a channel for many weeks, the pair has finally acquired enough momentum to push upwards.
The American dollar received a significant push on account of economic data exceeding the expectations of investors. In particular, inflation is growing steadily, and the value of Treasury bond yields is increasing. These two factors indicate that the American economy is growing and despite the political issues involving the United States, investors are finally confident in the dollar once more. Tomorrow we expect the latest GDP data from the US, which could potentially boost the dollar even more. We expect the USD to continue gaining in value.
On the other hand, the Japanese yen has been weaker lately, mostly because tensions in the region have calmed and there is less demand for safety assets like the JPY. Moreover, there is also a little bit of uncertainty in terms of inflation in Japan: in January and February inflation grew quite dramatically between 1.4 and 1.5% at a pace faster than even the European Union. This signaled that the Bank of Japan might need to ease stimulus soon. Yet in March inflation was smaller again at 1.1%, so now it is not clear what decision the BoJ will make regarding interest rates. It is expected tomorrow.
In terms of the daily chart today we have a pivot point for the USD/JPY pair located at 109.21. We expect the pair to remain bullish for now, so pay attention to the nearby resistance levels at 109.63 and 109.89. If the pair drops below the pivot, then look for the support levels at 108.95 and 108.53. The indicators of technical analysis unanimously agree on a strong buy signal.
