USD/JPY: the US dollar is testing 124.00 for a breakout
Current trend
The US dollar shows weak gains against the Japanese yen in Asian trading, testing 124.00 for a breakout. The USD/JPY pair is developing an uptrend, formed at the end of last week, and is updating local highs from March 29. Moderate support for the US currency is provided by moderately optimistic macroeconomic statistics from the US on business activity from ISM.
At the same time, the general situation on the market is changing little and the demand for the dollar is still held against the backdrop of deteriorating growth prospects for the global economy. In addition, traders expect further steps from the US Federal Reserve towards tightening monetary policy. In May, the American regulator will meet for a regular meeting, following which the interest rate can be increased immediately by 50 basis points. The Bank of Japan, in turn, is forced to maintain a soft monetary policy in an effort to overcome deflationary risks. The day before, the Governor of the Japanese regulator Haruhiko Kuroda, speaking in Parliament, said that the recent fluctuations in the yen were too rapid, and the stability of the national currency is extremely important. The official reiterated that a weak yen is good for the economy as a whole as it helps boost overseas profits for companies and stressed that the central bank will continue to buy unlimited 10-year bonds if long-term interest rates rise quickly.
Tuesday's macroeconomic statistics from Japan turned out to be ambiguous. Thus, the Jibun Bank Manufacturing PMI in March strengthened from 48.7 to 49.4 points. At the same time, Overall Household Spending in February slowed down sharply from 6.9% to 1.1%, which turned out to be noticeably worse than analysts' forecasts at the level of 2.7%.
Support and resistance
Bollinger Bands on the daily chart show a steady increase. The price range is narrowing, reflecting ambiguous dynamics of trading in the short term. MACD has reversed to growth having formed a new buy signal (located above the signal line). Stochastic grows more actively and is approaching its highs, which reflects risks of the overbought USD in the ultra-short term.
Resistance levels: 124.00, 124.50, 125.09.
Support levels: 123.02, 122.00, 121.26, 120.50.
The US dollar shows weak gains against the Japanese yen in Asian trading, testing 124.00 for a breakout. The USD/JPY pair is developing an uptrend, formed at the end of last week, and is updating local highs from March 29. Moderate support for the US currency is provided by moderately optimistic macroeconomic statistics from the US on business activity from ISM.
At the same time, the general situation on the market is changing little and the demand for the dollar is still held against the backdrop of deteriorating growth prospects for the global economy. In addition, traders expect further steps from the US Federal Reserve towards tightening monetary policy. In May, the American regulator will meet for a regular meeting, following which the interest rate can be increased immediately by 50 basis points. The Bank of Japan, in turn, is forced to maintain a soft monetary policy in an effort to overcome deflationary risks. The day before, the Governor of the Japanese regulator Haruhiko Kuroda, speaking in Parliament, said that the recent fluctuations in the yen were too rapid, and the stability of the national currency is extremely important. The official reiterated that a weak yen is good for the economy as a whole as it helps boost overseas profits for companies and stressed that the central bank will continue to buy unlimited 10-year bonds if long-term interest rates rise quickly.
Tuesday's macroeconomic statistics from Japan turned out to be ambiguous. Thus, the Jibun Bank Manufacturing PMI in March strengthened from 48.7 to 49.4 points. At the same time, Overall Household Spending in February slowed down sharply from 6.9% to 1.1%, which turned out to be noticeably worse than analysts' forecasts at the level of 2.7%.
Support and resistance
Bollinger Bands on the daily chart show a steady increase. The price range is narrowing, reflecting ambiguous dynamics of trading in the short term. MACD has reversed to growth having formed a new buy signal (located above the signal line). Stochastic grows more actively and is approaching its highs, which reflects risks of the overbought USD in the ultra-short term.
Resistance levels: 124.00, 124.50, 125.09.
Support levels: 123.02, 122.00, 121.26, 120.50.
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