Friday, April 12, 2019

USD/JPY - 12 April 2019


Fundamental Highlights

The USD/JPY gained back most of its weekly losses as US Treasury yields bounced and the positive US data boosted the Dollar further. Interestingly, the pair held on to gains despite the poor performance of global equities. This divergence between this pair and the equity markets could be a signal that this recent bullish momentum won’t be fading anytime soon, and more gains for the US Dollar are ahead of us. Furthermore, Fed's speakers throughout the US session supported the greenback, as Vice Chair Clarida stated that "the current economic expansion almost certainly will become the longest on record." Fed's Williams, said that the US economy is 'healthy' and comfortable with inflation close to Fed's 2.0% target. There are no macroeconomic data coming out from Japan today.

Technical Analysis

The Dollar/Yen soared yesterday breaking above key resistance areas and in turn forming this big picture Inverse Head & Shoulders pattern. Currently price just broke above the ‘Neckline’, potentially confirming more upside is ahead of us. The bulls are facing one more major resistance at 112.00 (R1) before a full confirmation of this pattern. If they break above it, we could likely see a huge rally on the Dollar. On the other hand, if 111.50 (S1) is lost, then this pattern will be invalidated and the bears will regain control.

Support: 111.50 / 111.25
Resistance: 112 / 112.30

Chart (H4)