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Today we will consider another major and quite interesting currency pair - the dollar/yen, where the main priority will be directed to the technical component. However, before proceeding to the technical picture of the USD/JPY, I will allow myself a small preface. At the end of trading on March 8-12, the Japanese yen was the only one of all the major currencies that showed a decline against the US dollar. Let me remind you that this situation has already been observed before, so nothing is surprising or unusual in such a factor. This week will be very important for USD/JPY, as on Wednesday, the US Federal Reserve will release its decision on interest rates and publish updated economic forecasts, followed by a press conference of Fed Chairman Jerome Powell. On Friday, the baton will be taken up by the Bank of Japan, which will also make its decision on rates. With a high degree of probability, we can assume that these important events will have a significant impact on the price dynamics of USD/JPY, but for now, we will move on to the analysis of the trading week that ended on Friday.
Weekly:
Following the results of the last five-day trading, the quotes continued to strengthen, and the week ended with the growth of USD/JPY. Thus, the second consecutive weekly candle closed above the 144 exponential moving average, which is colored orange on the chart. Of course, this is a positive factor for the bulls on this instrument, which implies a high probability of continuing the upward trend. The beginning of trading confirmed this assumption, but the most important events for USD/JPY are still ahead, so we cannot rule out drastic changes in the price dynamics of the dollar/yen. Here, much will depend on the decision and comments of the Fed and the Bank of Japan, as well as on the reaction of market participants to these events.
If we return to the technical picture, during the growth, the pair gradually approaches a strong resistance level of 109.85, slightly above which the most important psychological and technical level of 110.00 passes. I believe that if the weekly trading closes above this mark, the chances of subsequent growth will become even more realistic. If the final weekly candle is made in the form of a bearish reversal candlestick analysis pattern, it will be possible to consider the growth of the pair completed, then hope for the downward dynamics of the instrument and prepare for its sales. That is, in fact, are all the thoughts about the weekly time frame.
Daily:
On the daily chart, we see that at yesterday's trading, attempts to continue the rise in the rate encountered strong resistance, which is the level of 109.37. At the moment, the pair is slightly strengthening, showing a willingness to retest yesterday's maximum values for a breakout. It is difficult to guess what will come out of this because starting from 12:30 UTC, macroeconomic statistics from the United States will be released, where I recommend paying special attention to retail sales and industrial production. These reports will likely affect the course of today's trading in USD/JPY. If the nearest resistance has already been identified and further bullish prospects will depend on the ability to overcome it, then strong support is noted in the area of 108.30-108.17, where a significant technical level of support is located, as well as the Tenkan line (red line) of the Ichimoku indicator. At this point, the main trading recommendation for the USD/JPY pair is to buy, but I think it is technically wrong to open them under the resistance of 109.37. Either we are waiting for a breakout of this mark, after which we buy on a pullback to 109.37, or we are looking for options to open long positions after corrective pullbacks to 109.15, 109.00, and 108.65.
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