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Dollar Remains Stuck against the Japanese Yen


Looking at the benchmark USD/JPY currency exchange rate, the U.S. dollar has been trading in a rather narrow range against the safe have Japanese yen. This range is from 108.60 yen to 109.70 yen and has been in effect since the last trade week in March.

Basically, the April high price point at 109.70 yen is the first upside barrier to break if the U.S. dollar wants to see meaningful gains and on the downside, the key support to watch lines up at 108.60 yen. The USD/JPY Forex market seems more concerned about rates than anything else.

The last big move came when the April U.S. consumer price index came in stronger than expected at 4.2 percent. This was well above the 3.6 percent forecasted and shattered March’s consumer price index number at 2.6 percent.

Monday’s economic calendar is quite light. As far as the Japanese yen is concerned, Bank of Japan’s Governor will give remarks during the Asian trade session. The U.S. Chicago Federal Reserve branch will release their national activity index. The United Kingdom and the European Union have no economic releases scheduled.

Daily U.S. Dollar Analysis (USD/JPY)

Looking at the above daily MT 4 price action chart, the timing of trades is more important than price direction. At some point the United States will raise rates. It is not important when, but that is the agreed upon hypothesis as their economy reopens and strengthens. This means economic data pertaining to employment and price pressures will play a role with dollar price volatility.

The 14 day momentum indicator is providing very little signal as to price direction with the USD/JPY currency exchange rate. The key simple moving averages are sloping higher and the greenback is trading around the short-term twenty one (21) day simple moving average around 109 yen. With that said, the relative strength index (RSI) is also neutral at the mid-point.

Both sides of the above mentioned trade range have been tested and have held several times. Price direction is slightly higher as the key support level lining up at 108 yen seems out of range this week.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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