Today we would take a look at the USD/JPY pair. Though volatility in this pair continues, this week the USD has been able to turn the rates bullish again.
The Japanese yen remains predictable. The financial markets are experiencing high degrees of uncertainty. On the one hand, this is caused by the trade dispute between the US and China. The two countries agreed to resume trade negotiations almost a month ago, but this hasn’t happened yet. Additionally, there is trouble in the Middle East. All of this is drawing investors’ attention to the yen, which is a reliable safety asset.
The American dollar also serves as a safety asset, together with the yen and the Swiss franc. Right now there is a lot of speculation about whether the Federal Reserve would cut interest rates in the United States by 25 or 50 basis points. A deeper cut will weaken the dollar more significantly, but it is also less likely to occur. There is important interest and GDP data expected from the US this week and if it indicates that the economy is in a worse state than expected, the dollar may strengthen further due to low risk appetite.
In terms of the daily chart, we have a pivot point for the pair located at 107.89, with the pair trading above it currently. The support levels lie at 107.71 and 107.54, while the resistances are located at 108.07 and 108.24. The indicators of technical analysis lean towards a buy recommendation in the short term.
