Today we shall take a look at the USD/JPY pair. Recently, this currency pair formed two declining peaks and seems to be currently forming the third, after yet another modest climb upward.
The Japanese yen has had its fair share of ups and downs lately. On the one hand, the JPY is among the top safe haven assets on the market. It has held its ground against the dollar, for the most part, because investors flock to it every time there is any issue related to the US dollar, not that it is that common. Thus, the yen did not permit the dollar to break above 112, and instead initiated downward rallies every time the dollar climbed close to that level, bringing the pair down to the more comfortable 102-107 levels. On the other hand, now there is a new uncertainty on the horizon, one that affects Japan directly. The coronavirus, which arrived in Japan early but did not spread much, now appears on the rise in the island country. Prime Minister Shinzo Abe just declared a state of national emergency today, so it remains to be seen how Japan will handle the pandemic. But the yen could be under pressure due to domestic uncertainties.
The US dollar, meanwhile, is well-positioned to continue beating out the Japanese yen to the title of most preferred safety asset. The reserve currency enjoys high liquidity and attracts investment every time the market feels apprehensive. In fact, if the Covid-19 crisis becomes serious in Japan, the added market shock will likely boost the dollar and allow it to appreciate against the yen once more. This week’s unemployment data from the United States will also be key.
In terms of the daily chart, we have a pivot point for the pair located at 108.99, with the pair trading above it currently. The support levels lie at 108.59 and 107.95, while the resistances are located at 109.63 and 110.03. The indicators of technical analysis are a little mixed but ultimately recommend a sell position in the daily term.
