USD/JPY: the dollar will gain strength

Current trend

USD against the Japanese yen continues to consolidate in the side channel after a significant decline over the past two months.

The pair remains in a wide downward channel but the probability of a change in direction is high in view of growing demand for the dollar. During the current trading week, the instrument consolidated in a narrow range due to the lack of important macroeconomic releases.

The upward momentum is maintained against the backdrop of weak information on retail sales and industrial production in Japan. The data on the growth rate of the US economy for Q4 2017 is due today. At the end of the week, investors should pay attention to the data on the labor market and the construction sector of the United States. Japan will publish information on major indices.

Support and resistance

In the short term, the investment attractiveness of the dollar is expected to grow: favorable data will facilitate this, and the pair can exit the current trend, breaking out the upper border of the channel. After this, a longer upward correction may be formed, followed by an uptrend. An alternative scenario may be the negative statistics for the US and the consolidation of the pair in the current downward channel with targets of 105.00, 104.50.

Technical indicators on the H4 chart are in the signal change phase: MACD signal line is near the zero mark, and Bollinger Bands are arranged horizontally.

Support levels: 106.80, 106.10, 105.60, 105.00, 104.50, 103.70.

Resistance levels: 107.30, 107.75, 108.15, 108.45, 109.00, 109.85, 110.50.

Trading tips

In this situation, long positions may be opened from the current level, relying on the break out the upper border of the range with targets of 109.00, 109.55 and the stop-loss at 105.30.

US Dollar vs Japanese Yen

Buy Sell Spread
107.15 107.126 24


Timeframe Weekly
Recommendations BUY
Entry Point 107.14
Take Profit 109.00, 109.55
Stop Loss 105.30
Support levels 103.70, 104.50, 105.00, 105.60, 106.10, 106.80, 107.30, 107.75, 108.15, 108.45, 109.00, 109.85, 110.50

USD/JPY: the dollar will gain strength

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