Today we would take a look at the USD/JPY currency pair, which is one of the most popular assets among traders. The pair recently managed to overcome its channel and has been moving bullishly.
The American dollar is supported by sound economic data. Most recently the United States published their preliminary GDP data for the first quarter of 2018 which came in positive at 2.3% against 2.0% expected. This, together with rising inflation and wages, has been a good indication of a healthy economy. Analysts are speculating whether the Federal Reserve will raise interest rates once again, since there are two out of the three hikes promised remaining. However, the probability of an immediate hike is relatively low at 34%; it is more likely that the Fed will wait until June. We still expect the USD to continue gaining in value.
On the other hand, the Japanese yen continues to weaken. First it eased due to lowering tensions in the region, especially considering that relations are improving between North and South Korea. Then it continued to decline due to the Bank of Japan not raising interest rates and the fact that inflation is not growing as fast as desired. We expect the weak yen to continue in this manner.
In terms of the daily chart today we have a pivot point for the USD/JPY pair located at 109.26. We expect the pair to remain bullish for now, so pay attention to the nearby resistance levels at 109.49 and 109.68. If the pair drops below the pivot, then look for the support levels at 109.07 and 108.84. The indicators of technical analysis unanimously agree on a strong buy signal.
