Today we shall take a look at the USD/JPY pair. Throughout last week the exchange rate of this pair was a bit choppy and uncertain, with a mild recovery to 109.82, but the rate did not manage to overcome the strong resistance at 110 and rebounded. Now it is trading more or less flat around 109.70.
At present, the Japanese yen does not seem to have the power to influence the exchange rate of this pair. The yen recently made gains as a safety haven asset because traders were spooked by fears of a worsening in the coronavirus pandemic, thanks to the spread of the delta variant around the globe. Those fears are still relevant, but most developed countries are not struggling too much at the moment, while China seems to have brought its own outbreak under control, which has created less of a demand for safe havens. No intrinsic factors related to the Japanese yen are important right now, so the movement of this pair is up to the USD.
As for the US dollar, right now it is moving very cautiously and will likely not swing one way or the other. The reason for this is the upcoming symposium of the Federal Reserve this week. Chairman Jerome Powell is expected to announce the beginning of the tapering of asset purchases, according to the minutes of the most recent FOMC meeting, where most members seemed to support a speedy tapering. If that is indeed the announcement that Powell makes, the dollar will strengthen. But if the Fed is also worried about the Covid-19 pandemic and decides to wait, the USD will weaken further and give the yen an opportunity to push the rate lower.
In terms of the daily chart, we have a pivot point for the pair located at 109.83, with the pair trading below it currently. The support levels lie at 109.51 and 109.33, while the resistances are located at 110.01 and 110.33. The indicators of technical analysis agree in strongly recommending a sell position today.
