Today we shall take a look at the USD/JPY pair. This currency pair has seen lots of ups and downs lately, thanks to both assets in it being safe haven currencies reacting to the coronavirus pandemic and the measures countries are taking to limit it.
Last week, the Japanese yen managed to put an end to the dollar’s most recent rally and win back some of its lost ground, pushing the value of the USD/JPY down. Though the yen was initially under a lot of pressure when the coronavirus pandemic first began, concerns about it quickly declined. Japan was expected to be severely affected by the Covid-19 virus, especially due to its geographical proximity to China and its close trade relationship with it. However, after several hundred cases at first, Japan managed to stop the virus and today is not even in the top ten of the most heavily affected countries. With few relevant developments in Japan right now, the pair right now is influenced by the dollar strengthening or weakening, rather than the Japanese yen itself.
The markets experienced something of a mild recovery last week, which led to the weakening of the dollar all around. Thanks to an ambitious stimulus plan making its way from the Senate to the House of Representatives in the United States, as well as due to the Federal Reserve’s several emergency actions taken to support the economy, right now the dollar is well supplied. While investors are not worried about liquidity shortages and high risk aversion, we expect the USD to remain relaxed, possibly allowing the yen to push the pair further down. On the contrary, if economic sentiment flips the other way, the dollar could strengthen again.
In terms of the daily chart, we have a pivot point for the pair located at 107.75, with the pair trading above it currently. The support levels lie at 107.19 and 106.56, while the resistances are located at 108.39 and 108.94. The indicators of technical analysis are a little mixed but ultimately recommend a sell position in the daily term.
