Today we shall take a look at the USD/JPY pair. Since February 21, the pair has been moving in a pronounced bearish trend, dropping to multi-year lows.
The situation of the Japanese yen continues in the same vein investors have become accustomed to. Japan’s economy is in a state of recession and the current coronavirus outbreak, which has heavily affected East Asia, is only making matters worse. Even the yen’s usual status as a safe haven asset has not been able to help it. Thus, it may have been a little surprising to some to see the yen appreciate against the dollar so much. But it is not the strength of the Japanese yen driving the pair; rather, it is the dollar’s weakness.
While the American economy overall remains strong, but robust data from various sectors, the manufacturing difficulties and interrupted supply chains caused by the coronavirus outbreak will eventually have an impact on economic growth. Thus, the Federal Reserve announced an emergency rate cut last week. Moreover, investors seem certain that there will be another rate cut at the upcoming policy meeting of the Federal Reserve. The sudden dovish turn of the Fed is weakening the dollar massively, allowing other currencies to appreciate.
In terms of the daily chart, we have a pivot point for the pair located at 102.85, with the pair trading above it currently. The support levels lie at 101.44 and 99.79, while the resistances are located at 104.49 and 105.91. The indicators of technical analysis strongly recommend a sell position in the daily term.
