USD/JPY: Wednesday’s General Review

Current trend

US dollar strengthened yesterday against Japanese yen in view of the release of macroeconomic indicators that are positive for the US economy as well as expectations about positive vote of the Senate and the House of Representatives on the tax reform.

The growth in the number of new residential houses under construction in the USA made up 3.3%, and this result was unexpected for the market as economists waited for the indicator to reduce by 3.7%. The number of construction permits in November reduced by 1.4% which was better than the outlook of -4.9% and allowed USD to feel quite stable. The deficiency of current transactions balance in Q3 dropped from -124.4 bln to -100.6 bln USD. The indicator was above forecasts which had a positive impact on USD rate.

Today the pair continued to grow. Weal data on changes in Japanese PMI in all industries failed to support yen, and the indicator increased by 0.3% while economists expected growth by at least 0.4%.

Tomorrow at 04:00 (GMT+2) the decision of the Bank of Japan on the interest rate will be announced in Japan followed up by a press conference and a comment on the monetary policy of the Bank of Japan. The level of the rate is expected to remain unchanged at -0.1% determining the “dovish” tendency of the regulator which may have a negative impact on the rate of the Japanese currency.

Support and resistanceSupport levels: 112.88, 112.75, 112.60, 112.30.Resistance levels: 113.08, 113.30, 113.50.

USD/JPY Hourly Chart

Trading tipsBuy positions may be opened from the current level with target at 113.50 and stop-loss 112.70. The period of implementation is 1-3 days.Short positions may be opened from the level of 112.60 with target at 112.00 and stop-loss at 113.00. The period of implementation is 3-5 days.

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