USD/JPY Technical Analysis: Trend Still Bearish - 4 July 2019

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The JPY is still the main beneficiary of continued global trade and political tensions as one of the most important safe haven to hedge investors from the consequences of these tensions. Therefore, it was normal for the USD/JPY to stabilize around the 107.53 support level, and for two trading sessions, the pair failed to get a stronger momentum to move above resistance at 108.52. The general trend of the pair will remain bearish as long as it remains below the level of psychological resistance at 110. Today is a holiday in the US markets for the Independence Day and therefore expect relatively quiet movements to the performance of the pair unless there is a strong event supports the extent of investors’ appetite for safe heavens.

Investors returned to buying the Japanese yen again amid renewed fears that Trump would eventually impose stronger tariffs on China even after a truce was announced by the end of last week. Investors do not trust Trump and his policy, as he often negotiate and then imposed more tariffs. Technically, the pair will not be in an uptrend correction confirmation phase until it moves around and above the psychological resistance level of 110, otherwise the overall trend of the pair will remain bearish

Overall, the Japanese Yen will remain in the winning position continuously. The series of negative results of the US economic data continues to confirm the slowdown of the US economy and thus increase the expectations of the near date of the US interest rate cut. The US Federal Reserve recently confirmed the possibility of a US interest rate cut if the US economy continues to slow down and does not specify a date and economic developments that will support the earliest date.

The weakness of inflation levels and recent US job numbers have added pressure on the US dollar as it supports expectations of US interest rate cut by the US Federal Reserve to face a slowdown in the US economy.

Technically: As we had previously predicted, the stability of the USD / JPY below the 110.00 level will increase the bearish momentum of the pair, and the pair has reached the levels we expected in the previous technical analysis which is closest to the next support at 107.65 and then the following support levels will be 106.45 and 105.80 respectively. These levels confirm the strength of the downward trend. On the upside, the nearest resistance levels are 108.60 and 109.55, respectively. We still prefer to buy the pair from every bearish bounce.

In today's economic data, the economic calendar has no important data from Japan or the U.S. The pair will monitor with caution and interest the renewed global geopolitical concerns, and all about Trump's internal and external policy.

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Sara Patterson has a Master’s Degree in political science and enjoys analyzing both current events and the international markets to get a fuller perspective of the currency market. Before turning to financial writing, she taught English writing skills to high-school age students. Sara’s work has been published on various financial and Forex blogs.