Today we shall take a look at the USD/JPY pair. Since mid-December, the pair has hit a more or less flat level around 109.39-109.50 and still remains there.
The position of the yen is currently in jeopardy because of the high-risk sentiment on the markets. The Japanese currency lacks any domestic incentives to strengthen and instead relies on its safety asset quality to determine its movement. Because the US and China both announced rolling back some tariffs and the upcoming signing of a trade agreement, investors are not that interested in assets such as the JPY at the moment, allowing it to weaken. However, the fact that it is not weakening progressively, but rather, it is staying in a flat range, shows that the markets are ready to quickly react to any negative surprises.
This week the US markets will close down for Christmas, meaning it’s quite a slow week for the dollar (and other currencies from the countries where the holiday is observed). Yesterday’s durable goods orders was the only high-importance report from the US for the week, and it came in weaker than expected. The lack of significant events on the economic calendar, combined with a mixed performance in recent reports from the US could explain why the USD is reluctant to push the yen above 109.50.
In terms of the daily chart, we have a pivot point for the pair located at 109.41, with the pair trading just a pip or two below it currency. The support levels lie at 109.32 and 109.24, while the resistances are located at 109.48 and 109.58. The indicators of technical analysis recommend a strong buy position today.
