Today we would take a look at the USD/JPY currency pair. Ever since the beginning of 2018 the pair has been moving in a downward trend, but this week it began climbing back up again.
The American dollar has been under a lot of pressure lately. Trump’s administration went through a series of shocks as many officials left their posts and fresh blood was introduced to the Cabinet in their stead. In addition, the international markets have been keenly following the development with Trump’s proposed round of tariffs. His initial proposal for tariffs on steel and aluminum was significantly modified and many countries were spared from tariffs, which eased off some tension. However, China was not excluded and in return imposed its own tariffs on US imports. Then matters got worse as the US announced an even more ambitious plan to larger tariffs, exacerbating the fears of a global trade war. This has made the dollar quite fragile lately. Even though the Federal Reserve raised interest rates last week, the USD still wasn’t able to pick up.
Meanwhile, the yen was able to appreciate against the dollar quite a bit, in large degree because of the same insecurity that tends to push the dollar down. The Japanese yen is often seen as a safety asset and becomes a popular investment tool in times of trouble on the markets. Japanese economic statistics continue to look better than expected, so in the near future we expect the yen to hold its ground against the dollar.
Today on the daily chart we have a pivot point for the pair located at 105.28. If the pair climbs above it, look towards the resistance levels at 105.83 and 106.10. However, we expect that any upward ticks would be temporary and ultimately the USD/JPY would stay below the pivot, so we’re more interested in the support levels of 105.01 and 104.46. The indicators of technical analysis agree on a strong sell signal in the daily term.
