USD/JPY: the currency is traded near the strong levels of 116.00

8 February, 2016

Technical performance of the currency pair:

Previous closing: 116.89;
Daily range: 116.38-117.53;
Opening: 116.87;
52-week range: 115.96-125.86;
Annual revenue: -1.64%;
Change in % for the previous day: +0.11. 

Analytical review:

  • 29 January, the Bank of Japan puzzled market participants with the decision to reduce interest rate on deposit to the negative value. Due to this decision, (which was adopted to decreased deflation in the country), the Yen weakened by 250 points against the USA ;
  • At the press-conference the executives of the Bank of Japan said that the decrease in the interest rate could be continued;
  • Last week, the Yen has grown against the USD due to the decline in the oil prices during the trading session on Tuesday. The decline in oil price influenced on the security market and decreased interest of the speculators to the risky operations;
  • On 5 February, the data on the US labor market became known, which showed the rise in wages. The US Fed can increase interest rates;
  • The Yen hardly reacted to the data on non-farm payrolls on Friday. In January 151000 new jobs were created. Y-This is the lowest level since September. The forecast of 190000;
  • The data of “Commitments of Traders” showed ambiguous picture. Large speculators have different opinions on the Yen. There are less opened long positions than (approximately by 11%).

Summary:

  • At the moment the currency is traded at the strong support level of 116.00. Further decline in oil prices will trigger strengthening in the Yen. Ambiguous situation on macro-economic situation in the USA and Japan creates high volatility in the currency pair USD/JPY. According to “ÑÎÒ”, large speculators do not have common opinion about the Yen.
  • Therefore, movement in the market is mixed. Announcement of the head of the Central bank of the monetary policy can affect further movement direction. We recommend to enter the market from the key resistance and support levels.

Trading tips for the currency pair USD/JPY

Long-term trading: the currency is traded near the strong levels of 116.00 – 117.30. Classical reverse patter “Head and shoulders” has been formed on the weekly chart. After breakdown and consolidation of the price below this levels and in case of confirmation (for example, a pattern Price Action), we recommend to open short positions. Stop order can be placed slightly above the signal line. We advise to use “multi-trade’ for this position. Take profit can be placed in parts at the levels of 114.00, 112.50 and 110.50.


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