Today we would take a look at the USD/JPY currency pair. The pair has retreated from July’s highs but still remains volatile.
To begin with, the American dollar continues to enjoy solid fundamentals which help it appreciate against other major currencies. Last week the GDP for the second quarter statistics was published which, although it narrowly missed the target, is still the highest growth in a few years and gave a major boost to the dollar. Yesterday the Federal Reserve concluded an important policy meeting where they decided not to hike interest rates now, but strengthened analysts’ expectations of two more increases in September and December this year, despite President Trump’s disapproval of a hawkish policy. The Fed’s hawkishness is one of the top factors pushing the USD up.
There are currently no incentives for the Japanese yen to grow. Instruments containing the JPY are far more likely to be dominated by the other currency in the pair. In this case the Japanese yen is giving way to the much stronger dollar and we expect the pair to be bearish.
In terms of the daily chart today we have a pivot point for the USD/JPY pair located at 111.76, with the pair currently trading slightly below it. We expect the rate to continue dropping, so look towards the nearby daily support levels at 111.36 and 110.99. In case the dollar drops, look to the resistances at 112.13 and 112.53. The indicators of technical analysis are giving us a mixed signal right now, leaning towards a buy recommendation.
