Today we would take a look at the USD/JPY pair. After rapidly declining at the end of May, now the pair is trying to make small gains.
There continues to be a lack of incentives for the strengthening of the Japanese yen. The Bank of Japan is keeping their approach to monetary policy dovish, in light of very limited inflation growth in Japan and concerns over a possible economic recession. However, the JPY is very sought-after in times of trouble on the markets. The recent signing of a deal between the United States and Mexico calmed the markets a little, which could explain the upward momentum of the pair currently. However, with the much, much bigger trade dispute between the US and China still unresolved, the yen might start appreciating against the dollar again soon.
The American dollar has been weaker in the past few weeks. This is largely due to investors expecting an interest rate cut before the year’s end, which would be a dramatic switch in the Federal Reserve’s rhetoric, if it comes to be. Fundamentals from the States have not been ideal and investors have some concerns about a slowdown in the economy. Tomorrow we expect an important reading of the CPI, which will have a big impact on the dollar.
In terms of the daily chart, we have a pivot point for the pair located at 108.47. The support levels lie at 108.22 and 108.07, while the resistances are located at 108.62 and 108.87. The indicators of technical analysis are confident in recommending us a strong sell position.
