Friday, July 12, 2019

USD/JPY - 12 July 2019

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Fundamental Highlights

The Dollar/Yen erased all of its intra-day losses yesterday to close the day positively fueled by the Fed’s continued dovish remarks and better-than-expected CPI numbers. Treasury yields jumped on the inflation report, which is supportive for this pair as they will widen the spread between US Government bond yields and Japanese Government bond yields, making the greenback a more attractive investment. Equities printed new all-time-highs, which is also supportive for the US Dollar, as the Dow Jones Industrial soared above 27,000 for the first time ever. The Dollar will probably continue to be favored over the Japanese Yen as long as equities keep marching to new highs and the yields keep rising.

Technical Analysis

The Dollar/Yen dropped over 100 pips after touching the multi-year resistance trend line, 109. The bears were to break below the 50 and the 200-day moving averages, which is a major bearish signal. The bulls found a temporary support at 107.87, but the momentum is still very bearish. A small bounce towards 108.15 is expected before the sellers regain control and attempt to break below today’s low to target 107.6.

Support: 107.87 / 107.6
Resistance: 108.15 / 108.5

Chart (H4)
USDJPY