Today we would take a look at the USD/JPY currency pair. From the beginning of 2018 it has been going down gradually as the yen is strengthening while the dollar is wrapped in insecurity. Last week there was some upward movement but the pair quickly switched to a bearish trend again.
Without a doubt right now the most important factor for the American dollar is the political implications of President Trump’s proposed tariffs. He first shocked the market with an initial proposal for tariffs on steel and aluminum imports from many countries, then further worsened fears of a trade war by imposing additional tariffs on other goods coming from China. China has in turn imposed its own tariffs on US imports and has stated that it is ready to match any blow the United States sends in its direction. This is keeping the world on edge, as anything that has to do with these two major economies will have a resonating impact.
Meanwhile, the yen has been quite popular lately since it is generally seen as a safety asset. In times like these when the dollar is shrouded in insecurity, traders tend to prefer betting on the yen. Right now the Japanese yen is not affected by any internal factors, instead its support comes entirely from the problems of the US dollar.
In terms of the daily chart today we have a pivot point for the USD/JPY pair located at 106.16. In case that the pair remains temporarily bullish, pay attention to the nearby resistance levels at 106.34 and 106.79. If the pair resumes the bearishness it’s been known for in the past few weeks, then look for the support levels at 105.55 and 105.21.
