05.07.201812:13 Forex Analysis & Reviews: Fed protocols can affect the market

During the Asian session today, the USD/JPY pair reacted with a rather strong burst of volatility on the comments of a board member of the Bank of Japan. However, there were no serious technical changes in the alignment of forces.

BOJ board member, Takako Masai, said that prices in Japan are not high enough, despite the general improvement of the economy, and achieving the 2 percent inflation may take some time because of the persisting deflationary way of thinking.

Masai also drew attention to the fact of US protectionism, which will affect the global distribution of assets. Hence, further balanced and stable mitigation of the policy would be quite appropriate, in his opinion. According to the representative of the Central Bank, the 2 percent inflation is a worldwide standard, as it helps to stabilize exchange rates.

The latest statements led to the weakening of the Japanese yen against the US dollar.

From a technical point of view, the USD/JPY pair comes close to a large resistance level of 110.70. The breakthrough of which will lead to the formation of a new larger upward wave, with the return and renewal of resistance in the region of 111 and 111.55 yen. It is in this range that one can see short positions on the trading instrument, in the expectation of further strengthening of the Japanese yen against the US dollar as a safe haven.

Today there will be a number of important fundamental statistics on the US economy.

In view of yesterday's weekend in the US Independence Day, there are no significant changes in the markets. At the beginning of the North American session today, a report from the ADP on the labor market will be published. Economists expect an increase in the number of jobs by 190,000 in June this year. Also, there will be weekly data on unemployment benefits.

However, more attention will now be paid to the minutes of the last meeting of the Fed, in which investors will count on hints towards a more rapid increase in interest rates this year and the next. If traders do not receive new information in this direction, the pressure on the US dollar may increase, as the market will again move to the side of risky assets.

The technical picture remains unchanged. Only the breakthrough of resistance at 1.1680 can seriously damage the stop-orders of sellers, which will lead to a more active growth of the European currency with the renewal of the highs around 1.1730 and 1.1780. The main target of the sellers are the larger support levels around 1.1580 and 1.1530, but for this, it is necessary to return to the intermediate area 1.1630.