Current trend

At yesterdays’ trades the pair USD/JPY has reached the highs at the level of 124.06, which is close to the 8-year highs of 124.13 (22.06.2007). Investors continue to show high interest to the American currency amid positive US statistics released on Tuesday, as well as the statement of the head of the US Fed about probability of the interest rate increase this year. 

According to the agency Standard & Poor’s, the housing price index rose by 5% this month (as well as a month ago) against the forecast of 4.6%. The number of sold new houses has increased from 484 thousand to 517 thousand against the forecast of 510 thousand. However, the main driver of the rise in the USD was the increase in the US consumer confidence index, which rose from 94.3 points to 95.4 points against the forecast of 95 points.

The other factor putting pressure on the Yen was the minutes of the meeting of the Bank of Japan in April. Members of the board have revised timing of achieving inflation target. This decision of the regulator give ground to expect that in future the bank will adhere to the softer monetary policy

At today’s trades the pair USD/JPY has reached the previous highs and the Yen has yielded to pressure from the USD because of the statistical data. The pair has broken down 8-year highs at the level of 124.13 but failed to consolidate above this level, therefore this resistance level is still relevant.

This afternoon a block of the US news will be released. According to analysts both labor market and housing market statistics will be lower than the previous indices. If the data will exceed the forecast, the USD will strengthen against the Japanese currency, as it will increase chances that the US Fed will increase the interest rates this year.

Support and resistance

Resistance levels: 124.13 (highs of 22.06.2007), 125.00 (important psychological level), 125.75 (highs of 05.12.2012). 

Support levels: 123.49 (Asian session lows, upper line of Bollinger bands), 122.77 (yesterday lows), 122.00 (important psychological level).

Trading tips

Buy positions can be placed above the level of 124.30 with the first target of 125.00 and the next one at 125.75. Stop-loss is recommended at the level of 124.10. 

USD/JPY: analysis and forecast

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