Today we would take another look at the USD/JPY currency pair. Towards the end of November it began to decline due to the political struggles around tax reform in the United States which weakened the dollar somewhat against other currencies. This week the pair is back to an upwards movement, though it is still unclear whether the bears or the bulls will prevail.
The end of 2017 seems to be a bad time for the American dollar. The USD suffered for weeks during tax reform tensions since President Trump’s proposal faced a lot of criticism and a shaky future. His administration was able to push through several successful votes in favor of the reform, but instead of finding support in that, the dollar declined again as investors began looking seriously into the consequences this massive reform will have on the already big debt that the United States has. The dollar is also affected by the lower GDP growth prospects announced just today.
Meanwhile, the Bank of Japan stated once again its intention to continue with a very loose monetary policy in an attempt to bolster the economy and bring it closer to the ideal 2% inflation rate. Some fundamentals seem promising in this regard. On account of this, the BoJ is actually looking for a weaker yen, so it might expand the stimulus program even further. This is what allowed the yen to ease off again and now we can see an upward movement in the USD/JPY.
On the daily chart we have a pivot point for the USD/JPY at 113.25. If the pair drops below it, look toward the support levels at 113.04 and 112.73. However, we expect that the pair will move up, so we are more interested in the resistances located at 113.56 and 113.78. The indicators of technical analysis agree unanimously on a strong buy signal.
