USD/JPY has been gradually climbing higher amid steady bullish momentum since the price bounced off the 104.50 area with a strong bearish rejection. Despite the recent mixed economic data from the US and the government shutdown, USD managed to sustain the momentum over JPY which indicates USD strength which might lead to further bullish pressure in the future.
FED has been raising its interest rates since 2015. The US central bank implemented a record cycle of monetary tightening in 2018 by raising rates 4 times in a year. Most of the FED officials agree about a pause in the cycle of rate hikes as too rapid pace might cause imbalance in the economy. The US government shutdown has been going on for 28 days in a row that could affect the domestic economy. Economic growth decreased to 0.3% as per Anderson, just only due to the government shutdown. Citing FED officials, further negative impacts are to follow in the short term. The US economy is currently growing at 2.17% in the first quarter of 2019 which is marginally higher than FED's forecast of 2.11%. This week, the economic calendar lacks macroeconomicdata from the US. Today US trading floors are closed for the national holiday, Martin Luther Kings Day.
On the JPY side, Japan is currently having a shaky outlook this year with the risk of sliding into recession due to the US-China trade war. Though Japan is working hard to avoid the recession this year growing to 0.8% or more, it is still quite indecisive. Japan has suffered an indirect impact of the US-China trade war because it produces equipment for China such as semiconductors and mobile phones. Moreover, the decline in Japan's exports is bearish for JPY. Earlier this year, JPY has been quite stronger in comparison to USD. Now JPY is expected to struggle further against USD in the coming days.
Meanwhile, USD is going to hold the upper hand over JPY. Impulsive pressure with positive economic reports on the USD side is expected before it starts to dominate with proper sustainability.
Now let us look at the technical view. The price is currently holding in the range of 108.50 to 110.50 from where a daily close above 110.50 is expected to lead to further bullish pressure towards 114.00-115.00 resistance area in the future. Though the price is still quite bullish, a better confirmation of a break above 110.50 is required. As the price remains above 108.50 area with a daily close, the bullish pressure is expected to continue.
SUPPORT: 108.50, 109.00
RESISTANCE: 110.50, 112.00, 114.00
BIAS: BEARISH
MOMENTUM: VOLATILE
