Market Analysis – USDJPY
Today, during the Asian session, the USD/JPY pair is actively growing, renewing local highs since April 20. As the asset currently sits at the resistance level which was formed between 20th and 21st April, the market is waiting to see if the asset is able to find the momentum to break through the resistance level to form a higher price wave. According to the Elliott Wave Theory, the price of assets have “waves” which are required for a bullish trend in the longer term to form. After a protracted downtrend in the short to medium term, the dollar is finally attempting an upward correction. The reasons for the appearance of the “bullish” dynamics are technical factors, while investors expect the publication of the final minutes of the US Federal Reserve meeting next Wednesday. It should however be noted that the momentum strongly relies on the publication and comments made by the regulator.
When looking at the US Dollar index this morning we can see the price remains at the market-open and is not yet showing signs of neither bearish nor bullish price movement. When looking at the currency against individual currencies we can see the US Dollar is strengthening against Swiss Franc and Euro, but is showing flat dynamics against most other currencies. Looking at the Japanese Yen Index this morning we can see the asset is declining. If the asset continues to decline it will formalise the third consecutive day of price depreciation.
Today is the most important day of the entire Spring period for the US corporate sector. Seven companies from the Top 30 leading American corporations will present their data. The electric car manufacturer, Tesla Inc. has already done it. Despite expectations, the company’s revenues totaled $10.39B, slightly below the projected $10.42B. However, it did not disappoint investors as the corporation’s shares rose by 1.0%. Also today, the tech giant Microsoft Corp. will report its results. Its profit is projected at $41.04B, which is slightly lower than last quarter’s figures of $43.08B. Traders are also focused on the statistics of the company Alphabet Inc. Its revenue is expected to reach $51.36B and earnings per share will be at least $15.66. The performance of the US Stock market and US based companies is also known to have an affect on the valuation of the US Dollar, as at times the price has been correlated.
Yesterday’s March data on the volume of US durable goods orders were poor. The indicator increased by 0.5% after falling by 0.9% a month earlier, but significantly fell short of the forecasted value of 2.5%. American consumers remain wary of postponing major purchases, despite increased vaccinations and government successes in the fight against coronavirus. Johnson & Johnson’s single-dose vaccine was resumed over the weekend in the United States, as the risk of blood clots from its use was deemed low, but at a figure high enough for citizens to worry. Many citizens not only in America, but generally around the globe, have rejected the credibility of the specific vaccines. If the US based vaccines receive further poor publicity as had the Astrazeneca vaccine, it may dampen the demand levels of the currency or buyers sentiment.
Yesterday’s data for Japan on the price index for corporate services was positive. The indicator increased from 0.0% to 0.7%, as companies’ spending on advertising and transportation increased. The data suggested a moderate economic recovery after being hit by the coronavirus pandemic. Due to positive data, the Bank of Japan early this morning has advised the central bank will increase its growth forecasts for the fiscal year; although at the same time it was also acknowledged that the outlook remains “highly unclear” and could change depending on how the coronavirus pandemic evolves and affects the domestic and international economy. The Bank revised up its forecast for the 2020-2021 fiscal year that ended on March 31, projecting the economy would shrink 4.9 percent, compared with the 5.6 percent contraction it predicted in January. For the current fiscal year, it now expects 4.0 percent growth, against its January forecast of 3.9 percent, while it lifted its expectations for the fiscal year ending in March 2023 to 2.4 percent, from 1.8 percent previously.
Resistance levels: 108.20, 108.54, 109.00, 109.37.
Support levels: 107.78, 107.46, 107.00.