Today we shall take a look at the USD/JPY pair. After climbing last week, over the past few days the yen started gaining against the dollar on renewed doubts about US and China’s ability to end their trade war soon.
The economic situation in Japan remains precarious. The country’s state of deep recession offers no surprises to investors following the economic reports coming from Japan. However, the yen has the potential to strengthen whenever China and the United States are at odds. Recently, both countries expressed their hopes to reach a phase-one trade agreement soon, which decreased the appetite for safety assets such as the yen. Nevertheless, Donald Trump’s passing of a bill in support of Hong Kong’s autonomy from China, as well as the lack of a clear date for signing the agreement have made investors doubt it would happen at all. Thus, the JPY will remain sensitive to trade war news.
Though the US dollar is by far the strongest currency on the market, it has experienced some weakness lately. The prolonged conflict between the United States and China is affecting the US economy negatively. Just yesterday, we saw a decrease in employment and manufacturing. Later this week, we expect more economic indices, the updated unemployment rate, and an assessment of the US economy by the University of Michigan, which is an important event for investors.
In terms of the daily chart, we have a pivot point for the pair located at 109.23, with the pair trading below it currently. The support levels lie at 108.74 and 108.43, while the resistances are located at 109.53 and 110.03. The indicators of technical analysis are neutral today, so we need to wait for a stronger signal to trade.
