USD/JPY Technical Analysis: Attempts for an Upward Correction

Mahmoud Abdallah

We noticed a strong activity for the US dollar against the Japanese yen yesterday, as the bulls tried to break the strong downtrend of the currency pair. This pushed it towards the support level 108.57, from which the dollar yen currency pair was bought strongly with gains. This moved it towards the resistance level 109.30, which is stable around at the time of writing the analysis. I often mentioned buying the currency pair from every downward level. The signals from the contents of the recent meeting of the US Federal Reserve Bank were a catalyst for the US dollar to achieve strong gains against the rest of the other major currencies.

“A number of participants suggested that if the US economy continues to make rapid progress towards the committee’s objectives. It may be appropriate at some point in the upcoming meetings to start discussing a plan to “adjust the pace of asset purchases,” the minutes of the US Central Bank’s April meeting stated. The Fed was so cautious that Fed Chairman Jerome Powell said in his April press conference that the bank was not "even thinking about" reducing its bond purchases. The comment in the minutes of the Fed meeting did not specify when talks would start on reducing bond purchases. But it was the most explicit comment from the US Central Bank that better than expected economic performance could trigger such discussions at some future meeting

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According to the technical analysis of the pair: to confirm the transformation of the general trend of the US dollar against the Japanese yen to the upside, it is necessary to breach the psychological resistance 110.00, which may increase the buying operations. Even after the recent gains, the pair remains relatively neutral. Returning stability below the support level of 108.80 will negatively affect any bullish outlook for the currency pair. I still prefer buying the dollar yen pair from every downside. Today, the pair will be affected by the extent of investor appetite for risk or not, as well as the reaction to the announcement of the weekly US jobless claims reading and the Philadelphia Industrialist index reading

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Mahmoud Abdallah
Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.

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