The US dollar has become stable against a basket of world currencies after a significant drop since the end of May. At the moment, the dollar index (#DX) is in a sideways trend. The key trading range is 96.80-97.30. The US dollar is still under pressure amid growing prospects for lowering the interest rates by the Fed in the current year. Representatives of the Central Bank are concerned about low inflation, as well as the escalation of the conflict in world trade. Fed Chairman Jerome Powell said that the regulator closely followed the US trade disputes with other countries, and was ready to take appropriate measures to ensure stable economic growth. According to the CME FedWatch Tool, more than 55% of financial market participants believe that the Fed may reduce the range of key interest rate at a meeting on July 31.
At the moment, investors have taken a wait-and-see attitude before publication of a report on the US labor market for May on Friday, June 07. These statistics may affect the Fed's views concerning further monetary policy.
Recent reports from the US were ambiguous. Preliminary data from ADP indicated a slowdown in the number of people employed in the nonfarm sector of the country to 27K, which was significantly lower than the forecasted value of 180K. At the same time, ISM non-manufacturing PMI increased from 55.5 to 56.9. The consumer confidence index increased to 134.1 compared to market expectations at 130.1.
Experts expect mixed data on the labor market: the number of people employed in the US nonfarm sector will slow down to 185,000; the growth of the average hourly earnings will be 0.3% (m/m) in comparison to the previous value of 0.2% (m/m); the unemployment rate will remain at the same level of 3.6%. We recommend paying attention to the difference between the actual and forecasted values.
Let's consider the current technical pattern on the USD/JPY currency pair
- Support levels: 107.850, 107.400, 107.000
- Resistance levels: 108.500, 109.000, 109.750
- - the price has fixed below 50 MA and 100 MA;
- - the MACD histogram has been rising.
At the moment, the USD/JPY currency pair is consolidating after a continuous fall. The technical pattern is ambiguous. The trading instrument is testing key support and resistance levels: 107.850 and 108.500, respectively. Signals of indicators are different:
We recommend opening positions from the key levels.
If statistics from the US turn out to be weak, we expect a further fall in the USD/JPY quotes. The movement is tending to 107.300-107.000.
An alternative could be the recovery of the USD/JPY currency pair to the round level of 109.000.
Confirmations and entry points to the market should be looked for on lower timeframes. When tracking positions, we recommend using a trailing stop.
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.Open Account