Today we shall take a look at the USD/JPY pair. The trend of this pair has been more or less flat since the yen’s rally in early June. Keep in mind that both the yen and the dollar are safety assets, so safe haven demand tends to boost both of them, which makes the pair’s exchange rate difficult to predict.
In all fairness, there is nothing new regarding the Japanese yen. The Bank of Japan remains committed to a dovish monetary policy, as it was even before the pandemic, but this approach is now more or less standard among central banks all over the world. The coronavirus situation in the country is also stable. Though there are still new cases every day, the numbers remain relatively low, so Covid-19 does not pose an immediate danger to Japan. The most decisive factor that determines the movement of the Japanese yen is the demand for safe assets. However, even when this demand is high, the USD is likely to gain more than the JPY, unless there are additional factors pressuring the dollar.
Speaking of the USD, this week it seems to be appreciating very slowly against the Japanese yen. Still, that extension has so far only brought the rate of the USD/JPY back to the flat range from the second half of May. The dollar has had trouble breaking above 107.80 before, so we might see another flat trend form around the current levels. Still, this week there will be many reports published regarding the economy of the United States, including May PMIs, the minutes of the Federal Reserve’s latest policy meeting, and the much anticipated jobless claims reports that come out every Thursday. Any signs that the American economy is bouncing back would be positive for the dollar and propel it further up.
In terms of the daily chart, we have a pivot point for the pair located at 107.50, with the pair trading above it currently. The support levels lie at 107.11 and 106.65, while the resistances are located at 107.96 and 108.35. The indicators of technical analysis are strongly recommending a buy position in the daily term.
