Tuesday, October 9, 2018

What's the direction for Dollar/Yen now?

  • Dollar
  • Yen

Ever since the last week of September the Dollar has been rallying against the safe haven Japanese Yen. Although we saw some minor pullbacks for the pair within this time-frame especially on Monday, October 8th due to U.S. bank holiday, upwards was the main direction for the USD/JPY. This bullish move came on the back of a number of different news and reports during this period.

Main Events/News in the Past Weeks

A few events and news have occurred in the past few weeks that have made the market react positively towards the Dollar. The first major event was the implementation of the long awaited tariffs between the U.S. and China which took place on September 24th which increased investors' demand for the dollar. Another major event was the agreement between the U.S., Canada, and Mexico on September 30th, named the United States-Mexico-Canada Agreement. Through this, the U.S. will gain better access to Canada's dairy market which turned out positive for the currency.

In addition to these two main events, there was a string of speeches and comments from the Fed and President Trump that occurred along the way that have also had an impact on the direction of the pair. On the other hand, last Friday's NFP report came out lower than expected, at 134K compared to expectations for 185K. Having said that, the extremely low unemployment rate at a multi-year low and the steady wage growth branded the report as mixed, hence not taking a bearish toll on Dollar's outlook.

What's Next from a Technical Perspective?

Dollar/Yen ended a choppy week with a lower close on Friday after the NFP report. Moreover, the pair started this week's action a bit to the downside. It seems that the pair may slip slightly further towards the 113 area in the short-term but will find itself moving back upwards in the direction of the 113 level and eventually the 114.5 area.