Today we shall take a look at the USD/JPY pair. Ever since last week, the value of the pair has continued to grow and is currently at levels unseen since May 2019.
At the moment, no one can be surprised by the weakness of the Japanese yen. This currency is one of the world’s most popular safety assets, but the current sentiment on the financial markets favors risk over safety. Therefore, traders are not interested in the JPY currently, causing its value to plummet. The reasons for this are obvious. First, Iran and the United States do not seem like they would go to war with each other anymore, so that conflict has calmed down. Furthermore, a trade deal will be signed between the US and China tomorrow, which will help tone down trade concerns. Unless something changes or there is a new conflict, do not expect the yen to strengthen anytime soon.
The US dollar is currently enjoying quite a bit of support. The signing of a deal with China will be good for the American economy, as the burden of tariffs is actually shouldered by US businesses. A trade reprieve would then be beneficial for the economy and lower the probability of another rate cut by the Federal Reserve, which in turn boosts the dollar. Today we expect the December CPI from the United States, which could add volatility to pairs with the dollar.
In terms of the daily chart, we have a pivot point for the pair located at 109.86, with the pair trading above it currently. The support levels lie at 109.69 and 109.37, while the resistances are located at 110.18 and 110.35. The indicators of technical analysis recommend a strong buy position today.
