Today we would take a look at the USD/JPY currency pair. The rate was more or less bullish between September and November when there were periods of insecurity regarding North Korea and the United States, but the pair has since seen a lot of ups and downs. It ended 2017 on a bearish note and we think this would persist, at least for now.
If you have been following our other daily analyses of currency pairs, you probably already know that the American dollar is having a difficult time right now. Despite an increase of interest rates and the adoption of tax reform, both events which should have given a boost to the US currency, the dollar has actually weakened, mostly due to political issues in the US. There are some reports published at the end of the week which may cushion the blow on the USD.
Meanwhile, the Japanese yen is in a very confusing state. The Bank of Japan is leading a loose monetary policy in order to promote inflation, and is hoping for a weaker yen. However, not much has been gained by that, and some experts have argued that the BoJ might switch its approach. If that happens, the rate will probably drop further down.
In terms of the daily chart, we have a pivot point for the USD/JPY at 112.43. We expect the pair to drop below it to the support levels at 112.25, 111.99, and 111.81. If the yen manages to yield to the dollar’s pressure, then we might see an increase to the resistances at 112.69 and 112.87, but right now this scenario isn’t very likely. The indicators of technical analysis are unanimous in giving us a strong sell signal.
