Today we shall take a look at the USD/JPY pair. After a sharp drop last week, right now the rate is growing due to investors’ optimism regarding the trade negotiations between the United States and China.
The economic situation continues to be unfavorable for the strengthening of the yen. The Bank of Japan has signalled many times that it plans to maintain a dovish course in order to support the economy, which is in a state of recession. Normally, the Japanese yen is able to strengthen in times of trouble on the markets. However, as investors are hopeful that China and the United States might reach a trade agreement soon, safety assets are not as appealing to traders. As a result, the yen is weaker at the moment.
The US dollar also benefits from the positive developments in the trade talks between the United States and China. Donald Trump and Xi Jinping are still planning to meet, even though their earlier plans for a summit in Chile failed. Reportedly, China has asked the US to hold off on the new tariffs plan to come into effect in December, as well as to lift some older duties. If this happens, we would likely see the two leaders sign the “phase-one” agreement and continue cooperating for a more full-fledged treaty. The end of the trade conflict will have a positive impact on the global economy and the situation in the US specifically, where we are beginning to see signs of wear and tear due to Trump’s tariffs.
In terms of the daily chart, we have a pivot point for the pair located at 108.55, with the pair trading above it currently. The support levels lie at 108.35 and 108.01, while the resistances are located at 108.89 and 109.09. The indicators of technical analysis are confidently recommending a strong buy position.
