Yesterday, there was a reversal of USD / JPY. The growth of the dollar index provided significant support to this currency pair and as a result, for the first time in three trading days, the pair completed the trading day in positive territory.

Yesterday in Japan continued stock exchange weekend, which affected including the activity of investors in the pair USD / JPY. Therefore, the main driver of the movement remained the US dollar. Accelerating growth rates of the pair were first after the publication of good PMI data in the US manufacturing sector, and subsequently after the publication of FOMC protocols, which have a more significant and long-term fundamental impact on the market.

Recall that in the long run, the yen still looks like an outsider in this currency pair since the Central Bank of Japan intends to maintain its super-soft monetary policy in 2018, while the US Federal Reserve may accelerate even more than previously planned, raising interest rates. As follows from the FOMC protocols published yesterday, the regulator does not exclude the positive impact of the adopted tax reform on the growth of consumer activity that may accelerate inflation. In turn, the growth of inflation above the forecast level of 2% will force the Fed to take more active steps in the matter of raising the rate.

Today in Japan, the economic calendar was empty, so again the bidding will take place under the dominant influence of news from the United States.

Yesterday’s price increase made changes in the alignment of forces on the four-hour chart. The situation has changed in favor of buyers. Technical indicators, following the price of the decline went to growth. The currency pair now has a very good potential for growth, with the first goal in the region of the local resistance area formed by the levels of 113.50-113.75.

Review prepared by Fort Financial Services Research Department. Follow our publications!

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