Today we would take a look at the USD/JPY currency pair. The pair continues to experience ups and downs that coincide with risk appetite.
The USD continues in the same vein as the last couple of months: strong fundamentals, shaky geopolitical tensions. The conflicts Donald Trump is involving the United States in, such as a global trade war, so far have had more of an impact on the stock market than the US currency. Still, some analysts see the dollar’s potential for growth as limited, largely because the next interest rate increase is most likely already priced in.
The Japanese yen right now is influenced by global political events. The escalating trade conflict that the United States has against China, Canada, Mexico, and the European Union is making investors worried, which makes the yen attractive. At times of extreme stress, the yen finds boosts. However, in terms of the Japanese economy there isn’t much that can support the yen. Inflation in May was only marginally better than April, and still too low, considering how much quantitative easing the Bank of Japan is doing. There are no factors in the foreseeable future that would truly strengthen the Japanese yen. Today in the evening we expect several data reports from Japan which may add volatility to the pair.
In terms of the daily chart today we have a pivot point for the USD/JPY pair located at 110.13, with the pair currently trading slightly above it. We expect the rate to stay up today, so look towards the resistances at 110.57 and 110.93. In case the dollar starts losing to the yen, beware of the nearby support levels at 109.77 and 109.33. The indicators of technical analysis lean towards a buy signal right now.
