Today we shall take a look at the USD/JPY pair. The rapid upward momentum seen in the first half of October is all but a memory right now. After two weeks of chopping trading, on November 4 the rate turned sharply bearish and remains within a bearish wave at present, at a four-week low around 112.94.
Not too much has changed for the Japanese yen, despite what the USD/JPY exchange rate might suggest. The situation in Japan is more or less calm, after the country recently experienced another smooth transition to a new government. Though the Prime Minister is new, he intends to continue the accommodative policies of his predecessors. The Bank of Japan is also keeping the course of its own dovish monetary policy steady, so there are no causes for concern within Japan, nor any reasons to expect dramatic changes in the situation. If there is an improved demand for safe haven assets, the yen might pull ahead a bit more, but its overall bias is weaker than the dollar’s, so any advances seen currently have less to do with the yen itself and everything to do with the USD.
At the moment, the US dollar is experiencing some temporary difficulties that resulted from last week’s Federal Reserve monetary policy meeting. The Fed came through on its promise to start tapering asset purchases, but discouraged investors from expecting an interest rate hike as early as they had hoped to see one. Thus, the prospect of low interest rates for the foreseeable future has boosted assets like Treasury bonds and stock indices, at the same time weakening the dollar for the time being.
In terms of the daily chart, we have a pivot point for the pair located at 113.32, with the pair trading below it currently. The support levels lie at 112.96 and 112.72, while the resistances are located at 113.57 and 113.92. The indicators of technical analysis are a bit mixed but lean towards a sell recommendation.
