Today we would take a look at the USD/JPY pair. This pair has been steadily decreasing and even opened the week with a gap.
Japan is freshly out of the Golden week and the Japanese financial markets opened after a prolonged holiday. The Japanese market opening coincided with a surprise announcement from Donald Trump that he will hit China with more tariffs as of Friday unless they commit to signing a trade agreement with the United States soon. This resulted in new pessimism on the markets regarding global trade and naturally inspired more interest in the Japanese yen, which was already appreciating due to low liquidity during the holiday. There will be a host of fundamental reports from Japan published tomorrow, but until then we can expect the JPY to continue increasing in price.
The American dollar is currently hitting a neutral strip - it is not particularly influenced by anything that can weaken it, but it is slow to strengthen as well. Last week the Federal Reserve made it clear that the few alarming signs about the US economy we have seen in 2019 were likely temporary and as of now the central bank does not plan to start decreasing interest rates. This week we have a series of speeches by prominent Fed members, but we most probably would see a lull in the dollar leading up to Friday’s inflation data.
In terms of the daily chart, we have a pivot point for the pair located at 110.69. The support levels lie at 110.42 and 110.03, while the resistances are located at 111.09 and 111.35. The indicators of technical analysis recommend a strong sell position.
