Today we shall take a look at the USD/JPY pair. There still isn’t much that is exciting about the rate of this pair for investors. Despite some ups and downs, the general trend is mostly flat around 107.20, with only small fluctuations. Nothing has changed in the past ten days.
The Japanese yen is currently well-positioned to make gains on any perceived market uncertainty. The main stress factors for the markets are the coronavirus pandemic, which is still going on in many countries around the world, as well as any poor economic reports, which these days are quite common, thanks to Covid-19 and all of the disruptions it is causing. However, right now investors are not overly worried about these problems. In other words, the markets have become accustomed to the situation with the coronavirus and are not reacting to it in extreme ways anymore. As of last week, there has been an increase in risk appetite and a drop in the demand for safe assets like the yen. Thus, the JPY is not likely to strengthen in the next few days.
The US dollar is facing a similar challenge at present. The USD served as investors’ favorite safe haven for most of 2020, but because investors are not interested in these kinds of instruments right now, the dollar is weakening. Moreover, the United States is the most heavily affected country in the world. The US economy is likely to require more stimulus and a softer monetary policy, while Europe and Asia are already recovering. This could put the US at odds with the rest of the world in terms of economic growth and further pressure the dollar in the long term.
In terms of the daily chart, we have a pivot point for the pair located at 107.26, with the pair trading above it currently. The support levels lie at 106.99 and 106.74, while the resistances are located at 107.51 and 107.78. The indicators of technical analysis are mixed today but ultimately recommend a sell position in the daily term.
