Aug 10 2018

Yen tests key channel support as US-Japan talk trade

Robust Japanese GDP data at 1.9 percent hasn’t led the currency to appreciate much as the Yen traders watch for outcome of the trade talks with the world’s largest economy. The talk’s focus is on reducing import tariffs on cars along with the intention to proceed with bilateral negotiations. While retaining focus on achieving the 2 percent inflation target, the Bank of Japan may be under pressure to shift its accommodative policy stance.

Technically, Yen has been trading in a channel for the past 4 months since March end when it tested 104.5 against the greenback. The Japanese currency has nicely moved within a channel since then and is now testing the support of this channel; though the channel resistance line (marked in green) hasn’t been touched for the past 2 months. An even shorter 1 month resistance trend line (marked in red), shows the point of convergence for these short and medium term lines. Note the declining volume in this short period, showing a weaker support to break past this channel.

We expect an appreciating dollar in line with our long term view in our earlier research

https://www.myforexeye.com/usd-jpy-long-term-symmetrical-triangle-breakout/

Though a significant close below 111 will indicate a channel break and could head further down towards its 38.2% Fibonacci retracement level of 110.5.

#channelsupport #technicalanalysis #USDJPY #myforexeye