USD/JPY Testing Lowest Levels in 3 Months - 31 May 2019


The USD/JPY has ignored the continued strong growth of the US GDP and continued to move downward to the support level at 108.79 at the time of writing, the lowest level in 3 months. The attempt to for bullish correction did not exceed the 109.92 resistance level, and since the beginning of today's trading, the yen has seen stronger gains versus other major currencies as one of the most important safe havens, with no strong signs of a near end to the US-China trade dispute that threatens the future of the global economy. The results of the Chinese data today confirm the impact on the economy of the two sides of the global trade war.

On the daily chart below, breaking below the 109.00 support level will increase the selling and the pair will test stronger bearish levels. There are factors that support the USD gains and the gains of the strong Japanese Yen are currently at risk of evaporation at any time with any positive development of the current US-China trade war.

Despite the contents of the latest US Federal Reserve meeting minutes, some members of the bank's policy to raise interest rates, which is positive to the dollar, but the pair declined as the Japanese yen's strong gains returned as a safe haven amid growing investor fears of a widening US trade wars - especially with China after the US sanctions on the Chinese giant Huawei.

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 the previous technical analysis that the daily chart clearly shows a new bullish consolidation zone for the pair and that this performance foreshadows the pair's upcoming move towards further gains or bearish correction with the profit-taking operations.

Technically: As we had previously predicted that the stability of the USD / JPY below 110.00 will increase the bearish momentum of the pair and the next support levels may be 109.10, 108.60 and 107.80 respectively, which confirm the strength of the bearish trend. On the upside, the nearest resistance levels are currently at 110.10, 111.00 and 111.75, respectively. We still prefer to buy the pair from every bearish bounce.

On the economic data today: The economic agenda will focus on the results of Chinese data. Later in will be the US personal consumption expenditure, income average and spending for the US citizen and the Purchasing Managers Index of Chicago then the Michigan index of consumer confidence. The pair will watch with caution and interest any renewed global geopolitical concerns and all about Trump's internal and external policies.


Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.