Daily Market Recap - USDJPY

The US dollar has gone back and forth during the trading session on Thursday, as we continue to see range bounded price action around the 50-day EMA and the 200-day EMA. The USDJPY is up 0.67 percent at the time of writing. Renewed optimism on a trade agreement between China and the US lifted equity markets, in turn raising the USD and weighing on the JPY.

Despite having lowered the interest rate three times this year, the US federal reserve maintained its interest rate at 1.75 percent yesterday. The Feds president Powel justified the status quo on rates as “insurance” to offset the effects of the US-China trade dispute and overall global economic slowdown. Powell was quoted saying at his news conference that “Inflation is barely rising, although unemployment is at its lowest level in 50 years and is expected to remain so”. This move suggests that the Fed is now less worried about trade wars or international recession financial threats.

The USDJPY is once again testing the critical 109.307 resistance level. Technical considerations have favored the pairs gains on Thursday as the pair climbed above the 109-mark breaching the previous seven-day trading range. A daily close above this level would indicate bullish momentum is coming back into play.

Looking at the technical, the USDJPY looks set to cross over into bullish territory this week. The current RSI is reading slightly above the 60-mark indicating further gains can be expected. The pair has been constrained to a range between 108.405 and 109.307 in the past month. Immediate resistance can be expected around the 109 handles, however, a strong push above it could signal bullish momentum to cross over the upward trendline established since September. On the flip side, should the price fail to settle firmly above, we would expect the sideways price action to continue. Bears would be looking at a push towards the 50 percent Fibonacci retracement at 108.405. Albeit the current short moving average is fluctuating above the long-term average in yellow indicating upward momentum is likely to continue.

(Chart Source: Tradingview 12.12.2019)

More trade-related headlines are likely to continue to flow, affecting market sentiment. Another crucial case is the United Kingdom's general election. Results will be released during the Asian session on Friday.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.