Today we shall take a look at the USD/JPY pair. Last week we saw the end of the bearish movement in the trend of this pair and now we are seeing the exchange rate moving upwards.
Due to the current chaotic state of the financial markets, it is more difficult than usual to predict the movements of the Japanese yen. On the one hand, there certainly are enough negative factors to keep safe haven demand high, which normally has a positive effect on the value of the JPY. On the other hand, yen liquidity is not as great compared to the dollar, which makes it less attractive. In technical terms, we have seen the completion of a downward wedge pattern on the chart, so now an upward trend is expected to break out, and we are already seeing its first steps. The Japanese yen will likely remain weak to the US dollar in the next few days.
As mentioned above, the American currency is benefiting from high liquidity, making it one of the most desirable assets among investors. This has kept the value of the US dollar consistently high, even in the face of poor economic data as a result of the heavy coronavirus outbreak in the United States. Today the USD might be under some pressure due to the publication of CPI data in the US. Investors predict a drop in inflation, but that might not have a bad effect on the dollar right now because under the current conditions, it is to be expected. If the readings are lower than the forecasts, then the dollar might be in trouble. The numbers are predicted to be 0.4% and 1.7% for the overall and the core inflation rates, respectively.
In terms of the daily chart, we have a pivot point for the pair located at 107.33, with the pair trading above it currently. The support levels lie at 106.88 and 106.09, while the resistances are located at 108.12 and 108.57. The indicators of technical analysis are mixed at present, but lean towards recommending a buy position in the daily term.
