USD/JPY: Anticipation for Stronger Catalysts - 20 May 2019

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Despite the recent trade tensions between the US and China, the USD / JPY pair is stabilizing around the 110.00 resistance level and the 110.31 level at the time of writing the analysis. There are no important US data expected today, but the focus will be on the remarks of US Federal Reserve Governor, Jerome Powell, later in the day. Japan's economic growth, contrary to expectations, remained strong in the first quarter of 2019 and expectations were for a strong slowdown. The last pair losses reached the support level of 109.01 in early trading last week, the lowest in more than three months, with the growing trade tensions between the United States and China, with both to impose more tariffs. That global trade war threatens the future of the world economy as a whole, and it was natural that investors escape to Safe haven led by the Japanese Yen. US retail sales fell more than expected and negatively impacting the US dollar.

China responds to the United States to impose new tariffs worth $ 60 billion of US products after the Trump carried out the threat and impose more tariffs on $ 200 billion of Chinese products despite the continued optimism of the close agreement between the two sides to end the trade war which threaten the world economy.

The US economy managed to add new jobs more than expected, the unemployment rate fell to its lowest level in 49 years and the average hourly wage rose.

The Federal Reserve Board kept the interest rate unchanged as expected, pointing out that it is unlikely to raise or lower interest rates in the coming months amid signs of renewed economic health while at the same time inflation is still unusually low.

We noted in previous technical analysis that the daily chart clearly shows a new bullish assembly area for the pair and that this performance threatens of a strong move coming to the pair, either to increase gains or for a bearish correction due to profit-taking.

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Technically: As expected before, the stability of the USD/JPY below the 110.00 level will increase the bearish momentum for the pair. The next support levels of can be 109.30 and 108.70 and 107.80, respectively, which confirm the strength of the trend downward. On the upside, the nearest resistance levels are 110.25, 111.30 and 112.75, respectively. We still prefer to buy the pair from every bearish bounce.

On the economic front today: On the economic agenda, there will be the release of Japan's gross domestic product (GDP). As for the US dollar, we do not have any important data expected, except for remarks by Federal Reserve Governor Powell. The pair will watch with caution and interest any renewed global geopolitical concerns and all about Trump's internal and external policy.

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