Today we shall take a look at the USD/JPY pair. After a more or less flat streak early in December, since the weekend, the pair has turned steadily bullish once again.
The Japanese yen continues to lack any incentives for growth from within Japan. The country is wrestling with economic recession and the Bank of Japan is committed to a loose monetary policy in an attempt to support the economy, though this approach hasn’t produced any significant results so far. Moreover, the Japanese yen is relaxing against other currencies because there is currently more optimism on the financial markets and little interest in safety assets such as the JPY. The Conservative win in the UK general elections, as well as Trump’s announcement that the phase-one agreement with China is ready have inspired risk appetite among investors.
There isn’t much going on with the dollar. Recent fundamentals from the United States have been mixed. For example, while inflation and unemployment remain healthy, retail sales have dropped. Nevertheless, the Federal Reserve has made it abundantly clear that it does not expect any major developments and that the economy is stable for now, so the central bank will not be adjusting interest rates anytime soon. The USD has relaxed against other currencies, such as the pound and the euro, but the JPY is too weak right now due to the low demand for safe assets.
In terms of the daily chart, we have a pivot point for the pair located at 109.54, with the pair trading above it currently. The support levels lie at 109.40 and 109.22, while the resistances are located at 109.72 and 109.86. The indicators of technical analysis recommend a strong buy position today.
