Today we shall take a look at the USD/JPY pair. Last week the pair made a downward dip and still appears to be around the 110.75 which was previously reached at the end of June as well.
Though we have previously talked about how the Japanese yen seems to lack any incentives to strengthen, there are some interesting developments in the chart of the USD/JPY pair right now. Much of what we have said about the JPY before still stands. The Japanese economy is not in a particularly great shape and though Japan did not have such massive Covid-19 outbreaks like other developed countries, it is not doing very well with vaccines and is thus ill-equipped to face any new outbreaks of the coronavirus. The Bank of Japan is likely to remain one of the most dovish regulators in the world in the long term.
But besides all of that, it appears that traders are fed up with the choppy, boring trend the USD/JPY has exhibited in the past few years. Despite all of the yen’s inherent weakness and the low demand for safe havens like the JPY, the trend is not swinging strongly in favor of the dollar. This means that investors’ sentiment is changing and that more people are willing to bet on the yen to change the trend soon.
Indeed, the US dollar should have benefited from last week’s nonfarm payrolls report, which showed impressive job growth for the first time in a few months, but it did not. The trend of the USD/JPY is moving in favor of the yen in spite of the NFPs. Perhaps a reason for this is in all of the other labor data from the US, which was disappointing, but still, the fact that a good NFP report did not send the dollar flying against the yen is suggestive of a major shift in the momentum of this pair.
In terms of the daily chart, we have a pivot point for the pair located at 110.98, with the pair trading below it currently. The support levels lie at 110.77 and 110.58, while the resistances are located at 111.17 and 111.38. The indicators of technical analysis strongly agree in recommending a buy position today.
