Today we shall take a look at the USD/JPY pair. While the Japanese yen managed to recover somewhat in early March, it has been losing its positions against the dollar lately and the trend has turned bullish.
There hardly seems to be anything new we can say about the Japanese yen that you do not already know. Japan’s economy was in a de facto recession even before the coronavirus hit. Though Japan is not among the most heavily affected countries, its stagnant economy is not going to get any better at a time when the whole world is about to experience a massive recession. The only thing the yen has going for it is its status as a safe haven asset. However, at the moment, the US dollar is simply more popular with investors, which is why the yen is unable to strengthen.
Indeed, even though the United States will also likely not be spared the recession threatening the globe due to the massive quarantines and close-downs that the coronavirus pandemic demands, its economy still remains in better health than others. There have been some hiccups in Trump’s handling of the crisis, and some arguments in Congress, but the Federal Reserve has acted quickly and decisively. Thus, the dollar has better than expected liquidity and is currently the most reliable safety asset, which is why it is in high demand. It will most likely continue to grow in value.
In terms of the daily chart, we have a pivot point for the pair located at 110.83, with the pair trading below it currently. The support levels lie at 110.05 and 108.89, while the resistances are located at 111.99 and 112.77. The indicators of technical analysis are a little mixed but ultimately recommend a buy position in the daily term.
