21.01.202000:36 Forex Analysis & Reviews: Confidence above all: yen competes with the dollar

The Japanese currency behaves with restraint at the beginning of the week, but confidently, avoiding excessive volatility. Nevertheless, experts believe that serious changes are brewing in the USD/JPY pair. They will affect the positions of both the greenback and the yen, analysts said.

The pair is currently moving towards consolidation near 109.99. Experts predict a price increase to 110.53, and then its collapse to 109.77. However, this is now far away.

Monday morning, January 20, the USD/JPY pair started at 110.16-110.17. The pair continues to currently run in this range, sometimes beyond its scope.

According to analysts, the upward trend in the USD/JPY pair, continuing from January 8, 2020, is due to increased risk sentiment, and not fundamental factors. At the same time, the current strengthening of the dollar in the Asian pair may reach its limit amid an extremely slow recovery of the global economy. In the coming year, the greenback will be traded within the current range, namely 105–115 yen per US dollar. Experts believe the preservation of a long pause in the monetary policy of the Federal Reserve as the reason for this.

In the near future, State Street analysts expect a shift in the base range of the USD/JPY pair to rise to 110-115 yen against the US dollar. Experts believe that the driver of such growth is the increase in investor risk appetite after the trade truce of Washington and Beijing.

Note that the USD/JPY pair rose to 114.55 since October 2018, which indicates a high probability of a change in the current trend. Experts do not exclude that the greenback can find support at 110 yen per unit of the US currency, but this is possible only in case of a breakout of 110.20. At the moment, the USD/JPY pair is trying to overcome this bar, but it does not go beyond 110.19.

According to preliminary calculations, the market volatility will be low in 2020, as in the past year. Until the end of the first half of the year, the USD/JPY pair will remain in the range of 106–112, consolidating at these levels. Leading strategists of the Asset Management One financial group adhere to this forecast. Most analysts share their opinion.