Tuesday, January 22, 2019

USD/JPY - 22 January 2019


Fundamental Highlights

The Dollar/Yen is starting the trading day lower after the IMF decreased global growth forecasts. The drop in growth forecasts spread fear in the market and increased demand for safe haven currencies such as the Yen. The IMF decreased its global growth forecast for both 2019 and 2020, from 3.7% to 3.5% and from 3.7% to 3.6% respectively. Furthermore, the IMF blamed this drop on the more than expected slowdown in the Chinese economy and the deteriorating investor sentiment amid risks of a “no deal” Brexit. For today, investors will continue to digest yesterday's economic news and the US stock market's performance will be a good gauge for investor sentiment.

Technical Analysis

As negative sentiment hits the market, the Dollar/Yen pair breaks below the 13-period moving average (blue) reflecting a possible shift in the momentum of the pair. For now, the pair is moving towards testing the 50-period moving average and the break below this level will mean that the pair is officially trading below all the three major moving average. If the pair trades below all the three major moving averages then this will mean that momentum is bearish. The next move lower will be confirmed if prices break below the 108.93 support, paving the way for a drop towards 108.59. On the other hand, if sentiment improved and prices break back above the 13-period moving average then the pair will rise back towards the 110.10 resistance level.

Support: 108.93 / 108.59
Resistance: 109.53 / 110.10

Chart (H4)