Published On: Mon, May 1st, 2017

USD/JPY: consolidation of the upward trend


Current trend

During two last trading weeks of April the pair broke through over 350 points and consolidated around the level of 111.70. Today USD/JPY tested the level of 111.90 but failed to break out of it and turned to downward correction.

In the beginning of the week special attention should be paid to the statement by the US Prime Minister Stephen Mnuchin who may evaluate the current inflation pressure situation and the prospects of economic growth in the medium term. Also a number of important releases from the USA will be dedicated to indexes, personal expences, and construction sector.

The most expected event of this trading week will the decision of FOMC and follow-up statement of FOMC Open Markets Committee.

Support and resistance

Today the pair is likely to show lower volatility and to move to downward correction. However, no considerably fall is to be expected as the trade instrument may drop down to the lower border of the narrow upward channel 111.45 after which a new upward wave will be formed. In the short term the pair is expected to grow to 112.25, 112.40. A lot will depend on the comments of FOMC representatives. Aiming for a tougher monetary policy will give considerable support to the US currency. In this situation the rate may grow to the levels of 112.90, 113.75. Technical indicators confirm the growth forecast. MACD shows rapid increase in the volume of long positions, and the upper line of Bollinger Bands on the level of 112.25 points out the nearest target for the buyers.

Support levels: 111.45, 111.15, 110.50, 110.10, 109.85, 109.50, 109.20, 108.80, 108.10.

Resistance levels: 111.90, 112.25, 112.40, 112.90, 113.10, 113.75, 114.00.

Trading tips

In this situation it would be wise to increase the number of long positions from the current levels and to place deferred long positions from the levels of 111.45, 110.50 with targets at 112.40, 112.90, 113.75. Stop-loss may be placed at 110.00.

Forex Analysis

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