At the beginning of this week’s trading and for the second straight trading session, the USD/JPY gains have settled around the 112.00 resistance level, the highest level since more than a month as investors took risks and abandoned safe haven positions, led by the Japanese Yen, amid optimism that the agreement to end the trade war between the United States and China is near, coupled with positive US inflation figures – consumer prices, producer prices and a drop in jobless claims to a 50-year low – was driving the dollar up.
The US Federal Reserve, according to the minutes of its latest meeting, may keep interest rates unchanged for the year 2019, and would be patient if they thought of raising interest rates, raising expectations that if things worsened for the US economy, the bank might be forced to cut rates rather than raise them.
Overall, the trend remains bullish as long as the pair remains stable above psychological resistance level at 110.00. Although the results of US job numbers are mixed, the pair has the opportunity to rise supported by risk appetite and the weakness of the yen as safe heaven amid optimism over the proximity of the US-China trade deal to end the world’s largest trade war that threatens the future of the global economy as a whole.
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In contrast, as expected, the central bank kept its monetary policy unchanged with its negative interest and despite the continuing US-China trade war and its negative impact on the performance of the Japanese economy, the bank has maintained its policy temporarily for the time being.
Technically: As we had previously predicted, the USD/JPY stability above the psychological resistance of 110.00 will increase the bullish momentum. Currently the nearest resistance levels for the pair currently 111.85, 112.60 and 114.00, respectively. On the downside, the nearest support levels are 110.90, 109.85 and 109.00 respectively. We still prefer to buy the pair from every bearish bounce.
On the economic data front today: The economic calendar is not expecting any important data today either from Japan or the United States of America. The pair will watch with caution and interest the renewed global geopolitical concerns and all about Trump’s internal and external policy.