Today we would take a look at the USD/JPY currency pair. In January the yen managed to overtake a weak dollar and push the price of the pair down, but this month some rallying action can be seen on the chart, though this is still somewhat limited.
The American dollar suffered almost two months of continuous losses before stabilizing. The USD was able to find some solid ground after a confirmation by the Federal Reserve that things are going as planned and we are likely to have an interest rate increase in March, as well as positive economic statistics. Reports indicated that in January jobs grew by 200,000 against the expected 180,000, together with significant wage growth - an element that was previously lacking. These results are important indicators for the Fed in their decision whether to increase interest rates or not.
Meanwhile, Japan continues to publish economic statistics that exceed investors’ expectations, pointing to a recovering economy. The Bank of Japan has shown a readiness to gradually withdraw from its massive stimulus measures and switch to a more hawkish approach, as needed. This allowed the yen to strengthen.
The USD/JPY is relatively volatile right now. We have a pivot point on the daily chart located at 109.32. If the price remains above it, look toward the nearby resistances at 109.72 and 110.11. We expect the price will drop below the pivot, in which case it may touch the support levels at 108.94 and 108.53. The indicators of technical analysis are giving us very mixed signals, though most lean towards opening a sell position in the daily term.
