After three bearish trading sessions for the USD/JPY pair, pushing it towards the 109.26 support level, the pair settled around 109.58 at the beginning of this week on expectations of limited moves for the pair today amidst a US holiday and the economic calendar's absence from any significant economic data. The pair has abandoned the resistance level of 110.00 and the stabilizing below it supports the bearish correction and at the same time shows new buying levels, the pair in the long run is still holding the bullish trend. Factors that support the gains of the dollar still remain, and the gains of the strong Japanese yen are currently subject to evaporation at any time with any positive development of the current US-China trade war course. Despite the contents of the latest US Federal Reserve meeting minutes, that some members of the bank's supports raising interest rates, which is positive to the dollar, the pair declined as the strong Japanese yen's safe haven gains returned amid growing investor fears of a widening US-Chinese trade war, especially after the US sanctions on the Chinese giant Huawei. To date, the dollar and Japanese yen have remained the most prominent as safe haven assets recently amid global trade tensions. Japan's economic growth, contrary to expectations, remained strong in the first quarter of 2019 and expectations were for a strong slowdown. China responded to the United States by imposing new tariffs on $ 60 billion of US products after Trump carried out its threat and imposed more tariffs on the $ 200 billion worth of Chinese products despite the continued optimism that the agreement between the two sides would be close to end that trade war which threaten the world economy.
The US economy managed to add new jobs more than expected, the unemployment rate fell to its lowest level in 49 years and the average hourly wage rose.
The Federal Reserve Board kept the interest rate unchanged as expected, pointing out that it is unlikely to raise or lower interest rates in the coming months amid signs of renewed economic health while at the same time inflation is still unusually low.
We noted in the previous technical analysis that the daily chart clearly shows a new bullish consolidation zone for the pair and that this performance foreshadows the pair's upcoming move towards further gains or bearish correction with the profit-taking operations.
Technically: As we had previously predicted that the stability of the USD / JPY below 110.00 will increase the bearish momentum of the pair and the next support levels may be 109.30, 108.70 and 107.80 respectively, which confirm the strength of the bearish trend. On the upside, the nearest resistance levels are currently at 110.75, 111.40 and 112.75, respectively. We still prefer to buy the pair from every bearish bounce.
On the economic data today: The economic agenda does not have any important economic data. The pair will watch with caution and interest any renewed global geopolitical concerns as well as Trump's internal and external policy.