The bullish momentum helped the USD/JPY test to the 112.16 resistance level in early morning trade, the pair's highest level since four months, as investors took risks and abandoned safe haven assists, led by the Japanese Yen. Amid optimism that the agreement to end the trade war between the United States and China, coupled with positive US inflation figures - consumer prices, producer prices and a drop in jobless claims to a 50-year low - was driving the dollar.
Technical indicators gave signals on overbought areas and that the pair at any time will start a downward correction with the selling and profit taking. The US Federal Reserve, according to the minutes of its latest meeting, may keep interest rates unchanged for the rest of 2019. They would be patient if they thought of raising interest rates, raising expectations that if things worsened for the US economy, the bank might be forced to cut rates rather than raise them.
Overall, the trend remains bullish as long as the psychological resistance remains stable at 110.00. Although the results of US job numbers are mixed, the pair has the opportunity to rise supported by risk appetite and the weakness of the yen as a safe heaven, amid optimism over the proximity of the US-China trade deal to end the world's largest trade war that threatens the future of the global economy as a whole.
In contrast, as expected, the central bank of Japan kept its monetary policy unchanged with its negative interest rates, and despite the continuing US-China trade war and its negative impact on the performance of the Japanese economy, the bank has maintained its policy temporarily for the time being.
Technically: As we had previously predicted that the USD/JPY stabilized above the psychological resistance at 110.00, which will increase the bullish momentum, and currently the nearest resistance levels for the pair are 112.60 and 114.00 respectively. On the downside, the nearest support levels for the pair currently are 111.25, 110.70 and 109.80, respectively. We still prefer to buy the pair from every bearish bounce.
On the economic data level today: The economic agenda, after the announcement of the Chinese data, will focus on the announcement of the US trade balance. The pair will be watch with caution and interest the renewed global geopolitical concerns. And all about Trump's internal and external policy.