Morning outlook - USD/JPY trades near 111.88
In accordance with expectations, the currency exchange rate continued to move to the south within one-week long descending channel. The further deprecation of the buck was supported not only by the pressure of 55-, 100- and 200-hour SMAs that were moving along the pattern’s upper boundary, but also by the increased US CPI and ongoing war of words between the US, North Korea and Iran.
At the moment, the northern side is additionally protected by the updated weekly PP at 112.13, while the southern side lacks of any notable technical barriers up until the weekly S1 at 111.43. These facts as well as the 56% bearish market sentiment suggests that in the nearest future the currency rate most probably is going to continue to move to the bottom.
In accordance with expectations, the currency exchange rate continued to move to the south within one-week long descending channel. The further deprecation of the buck was supported not only by the pressure of 55-, 100- and 200-hour SMAs that were moving along the pattern’s upper boundary, but also by the increased US CPI and ongoing war of words between the US, North Korea and Iran.
At the moment, the northern side is additionally protected by the updated weekly PP at 112.13, while the southern side lacks of any notable technical barriers up until the weekly S1 at 111.43. These facts as well as the 56% bearish market sentiment suggests that in the nearest future the currency rate most probably is going to continue to move to the bottom.
The Dollar edged higher against the Yen, as American officials confirmed their willingness to solve North Korean crisis through diplomatic means, including possibility of direct talks with Pyongyang. The 47-pip surge pushed the pair out of a descending channel but then it stuck near the 112.14 mark that presented disposition of the 100-hour SMA and the weekly PP.
A favourable informational background might strengthen the buck even more. Such scenario seems especially probable amid suspicion of existence of a new minor ascending channel. However, there is a need to take into account that the road upstairs is reliably secured by the 200-hour SMA. In the short run, this barrier is expected to force the pair to back down. But in larger perspective, as long as market sentiment will remain predominantly bullish, it has a chance to break to the top.