USD/JPY fundamental movers
The yen hasn’t received much help from economic conditions in Japan or Bank of Japan policy, but rising tensions between the U.S. and China have bolstered the yen, which has gained 1.2% in the month of May. Risk appetite has sagged and investors have snapped up the safe-haven yen.
Trade tensions between the U.S. and China rose sharply last week. The U.S. and China exchanged tariffs on each other products, dampening hopes for a trade deal and weighing on risk appetite. Nervous investors have been dumping equities in favor of safe-haven assets, such as the U.S. dollar and the Japanese yen. On Friday, the U.S. raised tariffs on $200 billion in Chinese goods, from 10% to 25%. The move was announced a week ago, triggering sharp declines in the equity markets. The Chinese response was vigorous, as China retaliated with tariffs on $60 billion of U.S products. Although the U.S.and China are scheduled to continue trade talks, investors are wary after the latest tariff battle.
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USD/JPY Technical Analysis
114.25 was the high point in November. Close by, 113.80 was a resistance line in November.
113.15 was a swing high back in July.
112.73 was an important resistance line in October.
112.25 has held in resistance since December.
111.69 was the high point of the current slide which started in early May. 111.15 follows.
110.40 (mentioned last week), is the next resistance line.
109.73 remained relevant during the week.
Close by, 109.35 was a cushion in mid-July.
108.70 was a cushion early in the summer and 108.10 was a swing low in late May.
107.50 capped the pair in early April.
106.61 is the final support level for now.
USD/JPY Daily Chart
I remain neutral on USD/JPY
With investors casting a worried eye on tensions between the U.S. and China, the safe-haven yen is an attractive asset. At the same time, the U.S. economy is firing on all four cylinders, while the Japanese economy has been treading water and remains fragile.