Today we shall take a look at the USD/JPY pair. Since last week the pair has steadily climbed and currently finds itself at the maximums around 106.88 previously seen in August 2020.
At the moment there is an absence of incentives for the Japanese yen to react strongly in either direction. Recent fundamentals from Japan have been neutral or slightly positive, but considering that investors are not currently looking for safe havens all that much, the yen has no reason to strengthen. At present, there are much more events that have to do with the dollar, which is why the USD/JPY rate is and will continue to be determined by changes in the USD rather than the yen.
As for the US dollar, it has been appreciating against the yen since last week. The reason for this lies in the reflation trading trend among investors. Thanks to the adoption of Joe Biden’s generous $1.9 trillion stimulus bill, the approval of yet another coronavirus vaccine, and the gradual winding down of the pandemic in the United States and other countries, market sentiment has improved. The yields on US Treasury bonds have become especially attractive, which has spilled over to the dollar, strengthening it. There are sufficient grounds to expect that the United States will recover faster from the pandemic than other countries, and this prospect is boosting the USD.
In terms of the daily chart, we have a pivot point for the pair located at 106.67, with the pair trading right above it currently. The support levels lie at 106.45 and 106.14, while the resistances are located at 106.98 and 107.20. The indicators of technical analysis agree in strongly recommending a buy position today.
