USD/JPY: the pair has growth potential

26 September, 2014

Current trend

O Thursday’s trading session the pair USD/JPY has lost 90 points, falling to the level of 108.47. The USD was under pressure of the weak statistics on the volume of orders for durable goods, which was below the forecast.

 Today, the “bulls” has regained the losses after the release of the Japanese consumer price index. Inflation in Japan continues to slow down: in August this index was 3.3% against 3.4% in July. Inflation excluding food fell to the level of 3.1%. Annual inflation is 1.1% now and it is unlikely that it can reach the target of 2.0% in the near future. Japanese people reduce expenses because of the consumption tax, which was introduced in April and which has a negative impact on Japanese economy and puts pressure on the national currency.

At the moment the pair is traded at the level of 108.80 (middle line of Bollinger bands); however the pair has growth potential and can rise up to the levels of 109.20 and 109.50. The growth can be triggered by the today’s data on the final US GDP for Q2. After some decline in Q1, US economy is expected to grow by 4.6%, which will strengthen positions of the USD.

Support and resistance

In general, technical indicators confirm probability of the rise in the pair. Bollinger bands are horizontal; however, the price has consolidated above the middle line. MACD histogram is in the positive zone; its volumes are not decreasing. Stochastic lines has crossed and turned upwards, forming a buy signal.

Support levels: 108.80, 108.50 and 108.30.

Resistance levels: 109.20, 109.50 and 109.85.

Trading tips

In the current situation it makes sense to open long positions from the level of 109.20

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