The Greenback Is Still Tumbling Against the Japanese Yen
- A second stimulus is expected from the Japanese government
- The USD/JPY is appreciating amid the slow economy in Japan
- The fed left the interest rates with no change
The USD/JPY is still flirting with the 106 level without succeeding to break it and close below it.
As it appears on the image below, many Doji candlesticks are formed around the 106 mark.
Two possibilities surround the USD/JPY in the future. The most probable scenario could see a rejection from the 106 level since it is acting as strong support. Another scenario could be a breakout out of this level, and then a sharp downward movement led by the bears.
Looking at the 4hr chart, the US Dollar to the Yen failed to break the 107.35 level acting as a resistance. This mark is considered as a key level since it was respected from the USD/JPY by acting as both support and resistance.
The Japanese Yen has appreciated against the US Dollar since the 11th of May. The pair was in a downward motion until it broke the white trendline. This could indicate a reversal of the USD/JPY, and an upward movement could be seen in the next few days.
Fundamentally, the Japanese economy is facing bad news. On Thursday, the Japanese Prime Minister Shinzo Abe mentioned that he would consider a second supplementary budget. In other words, he is aiming to stimulate the economy due to the pandemic.
Small businesses in Japanese are struggling amid the coronavirus spread, and owners are criticizing the government for taking too long to act in this crisis. The SME in Japan employs around 70% of the workforce, which might affect the Japanese economy badly in case they did not get support from the government.
On Wednesday, the chairman Jerome Powell refused to lower interest rates to a negative territory which gave the investors a positive sentiment towards the Greenback.
Could we see the USD/JPY reaching the 107.35 mark along with negative news coming from Japan and the bullish sentiment towards the US Dollar?