USD/JPY recovered in the first days of the past week, but met resistance in the 120.00 area forming a bearish engulfing candle on the daily chart.
Technically the pair’s currently toeing with the 55- and 100-day MAs at 119.78 and 119.30 respectively. Strong support is located at 118.50. Decline below that level is needed to make the pair slide to 118.33/00 and 117.00. The near-term bearish scenario will be dropped only in case of recovery above 120.00.
We see the lack of movement as the pair is consolidating ahead of the next week’s key events – the meeting of the US Federal Reserve on Wednesday and that of the Bank of Japan on Thursday.
Let’s focus on Japanese regulator. According to Japanese mass media, the Bank of Japan is planning to lower its inflation forecast. Such decision, if made, is going to be very negative for the yen and, consequently, positive for USD/JPY. At the same time, on the part of the US dollar the pair’s clearly lacking drivers: the Fed is expected to put off the interest rate hike from June to later this year. So, the main trade idea is cautious longs in the 118.90 area on Thursday with modest targets in the 120.40 zone.
Technically the pair’s currently toeing with the 55- and 100-day MAs at 119.78 and 119.30 respectively. Strong support is located at 118.50. Decline below that level is needed to make the pair slide to 118.33/00 and 117.00. The near-term bearish scenario will be dropped only in case of recovery above 120.00.
We see the lack of movement as the pair is consolidating ahead of the next week’s key events – the meeting of the US Federal Reserve on Wednesday and that of the Bank of Japan on Thursday.
Let’s focus on Japanese regulator. According to Japanese mass media, the Bank of Japan is planning to lower its inflation forecast. Such decision, if made, is going to be very negative for the yen and, consequently, positive for USD/JPY. At the same time, on the part of the US dollar the pair’s clearly lacking drivers: the Fed is expected to put off the interest rate hike from June to later this year. So, the main trade idea is cautious longs in the 118.90 area on Thursday with modest targets in the 120.40 zone.
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