USD/JPY: dollar positions are expected to strengthen

Current trend

At the end of October US dollar started to lose positions against the majors again. In view of this the pair USD/JPY moved to side consolidation. The main catalyst for the reduction of USD rate was the loss of investor demand although fundamental background gave opportunities for strengthening. Last week a number of negative releases on yen considerably weakened its positions. At the beginning of the current week the situation remained unchanged, and yen dropped in view of weak data on retail sales, labor market, and construction sector. Key releases from the USA scheduled for the end of the week may help dollar restore its positions.

Today’s releases from the USA include employment data, decision on the interest rates, and a follow-up statement by FOMC. Today’s data are likely to have a positive impact on the rate of USD, the tightening of the monetary policy will continue, and employment forecast is expected to be positive. At the end of the week traders have to pay attention to US labor market namely the data on changes in nonfarm payrolls.

Support and resistance

The growth of USD at the end of the week will secure the increase of the pair to new local maximums at 115.00, 115.50. The long-term trend will remain increasing which will give the pair additional support. Technical indicators confirm the growth outlook: MACD shows the preservation of the high volume of long positions, moreover, the price has broken out the middle line of Bollinger Bands and is aiming at the upper one (114.35).

Support levels: 114.00, 113.70, 113.45, 113.25, 112.85, 112.60, 112.40, 111.75, 111.00.

Resistance levels: 114.35, 114.50, 115.00, 115.50, 116.30, 116.70.

Trading tips

Long positions may be opened in the trend with target at115.50 and stop-loss at 113.20.