USD/JPY: US dollar hits highs since 2016
Current trend
The US dollar continues to develop an uptrend against the yen in Asian trading, testing 119.20 for a breakout and updating record highs since February 2016.
Demand for the Japanese currency remains quite low, as investors increasingly prefer other instruments, including the US dollar, as a safe-haven asset. In addition, the US Federal Reserve last week expectedly raised interest rates by 25 basis points to 0.50%, which made the dollar even more profitable. The Bank of Japan, in turn, kept the rate unchanged at -0.1% at Friday's meeting. At the same time, the regulator noted that the country's economy continues to grow relatively steadily, but the escalation of the conflict in Ukraine creates significant destabilization risks for global financial markets. Extremely low inflation rates allow the regulator to stay away from the trends that are currently relevant in developed markets. While the US Federal Reserve, the Bank of England, and the European Central Bank (ECB) are trying to contain the record growth in consumer prices, the Bank of Japan allows itself to keep the rate at minimum levels, but this situation may soon change. The authorities fear a continuation of the record rise in commodity prices, especially oil, as Japan is a major importer of "black gold", and higher energy tariffs could lead to a slowdown in the national economic recovery if rates remain at current levels. The situation on the commodity markets also affects the Japanese economy: in February, consumer inflation accelerated from 0.5% to 0.9%, and the Consumer Price Index excluding Food and Energy was -1% in annual terms against analysts' expectations at -0.9%. The indicators clearly show the existing risks.
Support and resistance
Bollinger Bands on the D1 chart still maintain a confident upward direction. The price range is narrowing from below, reflecting the attempt to form ambiguous dynamics of trading in the short term. MACD indicator is growing, while preserving a rather stable buy signal (located above the signal line). Stochastic has been near its highs for a long time, indicating the risks of the US dollar being overbought in the ultra-short term.
Resistance levels: 119.50, 120.00, 120.50, 121.00.
Support levels: 119.00, 118.43, 118.00, 117.50.
The US dollar continues to develop an uptrend against the yen in Asian trading, testing 119.20 for a breakout and updating record highs since February 2016.
Demand for the Japanese currency remains quite low, as investors increasingly prefer other instruments, including the US dollar, as a safe-haven asset. In addition, the US Federal Reserve last week expectedly raised interest rates by 25 basis points to 0.50%, which made the dollar even more profitable. The Bank of Japan, in turn, kept the rate unchanged at -0.1% at Friday's meeting. At the same time, the regulator noted that the country's economy continues to grow relatively steadily, but the escalation of the conflict in Ukraine creates significant destabilization risks for global financial markets. Extremely low inflation rates allow the regulator to stay away from the trends that are currently relevant in developed markets. While the US Federal Reserve, the Bank of England, and the European Central Bank (ECB) are trying to contain the record growth in consumer prices, the Bank of Japan allows itself to keep the rate at minimum levels, but this situation may soon change. The authorities fear a continuation of the record rise in commodity prices, especially oil, as Japan is a major importer of "black gold", and higher energy tariffs could lead to a slowdown in the national economic recovery if rates remain at current levels. The situation on the commodity markets also affects the Japanese economy: in February, consumer inflation accelerated from 0.5% to 0.9%, and the Consumer Price Index excluding Food and Energy was -1% in annual terms against analysts' expectations at -0.9%. The indicators clearly show the existing risks.
Support and resistance
Bollinger Bands on the D1 chart still maintain a confident upward direction. The price range is narrowing from below, reflecting the attempt to form ambiguous dynamics of trading in the short term. MACD indicator is growing, while preserving a rather stable buy signal (located above the signal line). Stochastic has been near its highs for a long time, indicating the risks of the US dollar being overbought in the ultra-short term.
Resistance levels: 119.50, 120.00, 120.50, 121.00.
Support levels: 119.00, 118.43, 118.00, 117.50.
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