Fundamental Analysis of USD/JPY for January 28, 2019

USD/JPY is currently trading in the range between 108.50 and 110.50. Ahead of NFP, the Fed's policy meeting, and FOMC Statement this week, the pair is set to trade with extreme volatility for the whole week.

USD is currently under the spotlight because of the longest ever government shutdown in the US which came to an end and crucial events like the Fed's policy meeting and NFP this week. Accroding to a recent survey, the tax cut of 1.5 trillion USD did not have any major impact on the businesses. Nevertheless, the White House believes this measure would boost business spending and job growth in the future. Moreover, the Federal Reserve is not expected to increase its interest rate which is currently held at 2.50%. Though the central bank is expected to increase interest rates only twice this year, the first rate hike could be delayed until Q2 of the year. Investors are going to keep close eye to Jerome Powell's speech on the monetary policy update on Wednesday for any hint that the central bank can provide while being closer to ending its balance sheet. The US Labor Department is going to publish NFP reports on Friday this week. Though the expectations are downbeat, any positive change can lead to certain gains on the USD side. Tomorrow US CB Consumer Confidence report is going to be published which is expected to decrease to 125.0 from the previous figure of 128.1.

On the other hand, today in Monetary Policy Meeting Minutes, the Bank of Japan policymakers disagreed over the level of bond yields. The US-China Trade War has already affected JPY. A positive outcome of the Trade War is expected to help Japan to regain momentum. Otherwise, the trade war will leave a fallout in Japan's economy. The BoJ members present at the Meeting stated some factors to look at, including reaching the 2% inflation target strain on Japan's economy amid a slowdown in the global economy. Moreover, SPPI report was published with a decrease to 1.1% which was expected to be unchanged at 1.2%. Though Japan's economy has been growing quite rapidly, the current situation is acting as a barrier to further growth in the process.

Meanwhile, JPY gains are expected to halt its advance against USD. Any positive economic data from the US may lead to further gain on the USD side in the coming days.

Now let us look at the technical view. The price is currently trading in the middle of the price range between 108.50 to 110.50, from where certain bearish pressure towards 108.50 is expected before the bulls push the price higher towards 110.50. A break above it will signal further bullish momentum in the pair with a target towards 112.00 area in the future. As the price remains above 108.50 area, the bullish pressure is expected to continue.

SUPPORT: 107.50, 108.00-50

RESISTANCE: 110.50, 112.00

BIAS: BEARISH

MOMENTUM: VOLATILE

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