Today we shall take a look at the USD/JPY pair. Since mid-October, the pair has been trading in a relatively narrow range, unable to break through significantly either up or down.
The Japanese yen is still not in a position to strengthen against other currencies. The economic situation in Japan is far from optimal. Despite the Bank of Japan’s dovish policies, the country is in a state of recession, and inflation remains terribly low. The only support that the yen receives comes from outside stress on the financial markets. Recently, the JPY has been weaker because of hopes for an agreement between the United States and China. But if that optimism starts wearing thin, we could see the yen strengthen again.
On the other hand, the US dollar is also not in the best position at the moment. Though the USD remains the strongest currency globally, right now it might give way because investors are quieting down ahead of the Federal Reserve policy meeting. Recent fundamentals from the United States have failed to meet the target levels, indicating that the economy is feeling some of the negative effects of the prolonged trade war with China. Tomorrow, the Fed will be deciding whether to lower interest rates for the third time in 2019 in order to better support the economy. A rate cut typically weakens the currency.
In terms of the daily chart, we have a pivot point for the pair located at 108.89, with the pair trading around it currently. The support levels lie at 108.74 and 108.51, while the resistances are located at 109.12 and 109.27. The indicators of technical analysis are confidently recommending a strong buy position.
