The Japanese Yen Succeeded to Push the Greenback Below 107 Mark
- BOJ decided, again, to ease its monetary policy to battle the pandemic
- Tokyo is not ready to lift lockdown restrictions
- The USD/JPY breached the monthly resistance (107 level) downward
4-Hr Time Frame:
The USD/JPY has been displaying a downtrend since the end of March. It formed a correction between the 100 SMA (Simple Moving Average) and the 107-monthly support. Yesterday, the price managed to break this level and continued its main direction downward.
If the price manages to stay under this support, there will be more downside risk for the USD/JPY, and the 105.10 level could be reached in the next few days.
A quick look at the dollar index could give the trader an idea of what might happen to the USD/JPY pair.
The dollar broke out the white trendline which gave the bears control over the bulls. Furthermore, the price of DXY closed under 100 SMA, which indicates a bearish sentiment from investors.
If this index manages to move further downward, we could see a downward movement of the USD/JPY pair in parallel.
Technical analysis alone is not enough to determine the direction of a pair. Fundamentals should be combined with technical analysis to have a better insight into what will happen next.
Despite the Bank of Japan considering another ease of monetary policy, the Japanese Yen is still showing power over the Greenback.
In addition, the president of the Japanese Medical Association believes that it’s not time to release the lockdown restrictions. It’s another negative news for the Japanese Yen.
“While new daily infections have declined, testing is still not sufficient to prove that contagion is under control. I do not believe it will be possible to lift (the state of emergency) across the whole country at this stage,”
JMA president Yoshitake Yokokura, on Investing.com
One single positive news that comes from Japan is that the unemployment rate of March came as expected (2.5%) on Tuesday, which might give the Japanese Yen a push over the US Dollar.
The bearish sentiment will control the USD/JPY over the next days until it faces new technical support combined with positive news from the US.