Earlier in April, the American currency declined amid weakening of the labor market; however, last week, situation has changed. The USD strengthened after the release of the minutes of the US Fed, which showed that the majority members of the regulator approve the increase in the interest rate this June. On these data the pair USD/JPY has reached the local highs of 120.35 and consolidated at this level. Last Thursday, demand for the American currency continued to grow and the pair exceeded the key resistance level. However, at the end of the past week the Yen managed to win back some of the losses, and the pair returned to the level of 120.35.
Today, despite positive data on the volume of domestic orders for engineering products in Japan, the pair has grown significantly and almost reached the local highs of 120.70.
Support and resistance
In the medium-term demand for the American currency is likely to increase, as investors’ interest to the Euro and Pounds has dropped. The pair USD/JPY is still in the uptrend; however the decrease in the volumes shows that the pair is moving to consolidation stage. Following sideways movement the USD will continue to strengthen amid expectations of the increase in the interest rate by the US Fed. In the long-term the USD will grow to the levels of 121.60 and 122.00 versus the Yen.
Support levels: 120.35, 120.00, 119.25, 118.80, 118.45 and 117.40.
Resistance levels: 120.70, 121.15, 121.60, 121.60 and 122.00.
It is recommended to open long positions and pending long positions from the key support levels of 120.00 and 119.25 and take profit at the levels of 121.60 and 122.00.