Today we would take a look at the USD/JPY currency pair. Looking back into the pair’s movement in 2017, we can say that we saw quite a lot of volatility with this trading instrument as there were a lot of destabilizing factors for the American dollar which created an appetite for the Japanese yen as a safe-haven currency. It appears that the pair would also end the year at a somewhat volatile spot.
The Bank of Japan is in the midst of a massive stimulus program which aims to bring the Japanese economy out of the state of deflation that has persisted for decades and promote inflation instead. However, despite the BoJ’s ambitious measures, inflation has failed to grow significantly in 2017 and still remains below 1%. Some analysts are beginning to speculate that the Bank of Japan will reconsider its stimulus program, considering that in the five years it has been implemented not much has been achieved. Still, dovish policies seem to be the preferred method of central banks to increase inflation, so despite a divergence of opinions, it is not very likely that the BoJ would change its stance anytime soon.
Meanwhile, not much is happening with the American dollar, which started losing positions after the Federal Reserve increased interest rates. With lowered GDP projections and a generally lazy market around the Christmas and New Year’s holidays, we don’t expect an increase in the dollar’s value soon. This is why we expect a bearish movement in the USD/JPY in the near future.
In terms of the daily chart, we have a pivot point for the price today at 113.30. If the pair reaches above it, be mindful of the nearby resistance levels at 113.46 and 113.55. Nevertheless, we expect the opposite scenario which entails more bearish movement, so watch out for the support levels at 113.21, 113.05, and 112.96. The indicators of technical analysis are somewhat mixed, but most seem to favor sell deals.
