USD/JPY: USD is strengthening 19 January 2021, 11:38

USD/JPY: USD is strengthening

19 January 2021, 11:38

Scenario
Timeframe	Intraday
Recommendation	BUY STOP
Entry Point	104.25
Take Profit	104.75
Stop Loss	103.90
Key Levels	103.25, 103.39, 103.60, 103.90, 104.20, 104.50, 104.75, 105.00

Alternative scenario
Recommendation	SELL STOP
Entry Point	103.85
Take Profit	103.39
Stop Loss	104.20
Key Levels	103.25, 103.39, 103.60, 103.90, 104.20, 104.50, 104.75, 105.00

Current trend

USD is significantly strengthening against JPY in today's morning trading, actively testing the level of 104.00 for a breakout. USD is once again becoming the safest currency for some time, but the sentiment of market participants is very changeable.

American investors are focused on the inauguration of US President Joe Biden, which will take place on January 20. Biden is expected to sign a series of executive orders right after taking office to combat the pandemic and discrimination. In addition, a sharp increase in government spending is expected, as well as the adoption of a new stimulus package for the US economy in the amount of almost USD 2 trillion.

JPY, in turn, remains under pressure after the release of disappointing macroeconomic statistics from Japan. Industrial production volume in Japan in November fell by 0.5% MoM after zero dynamics in October. In annual terms, the indicator accelerated its decline from –3.4% YoY to –3.9% YoY.

Support and resistance

Bollinger Bands in D1 chart show unsteady growth. The price range is almost unchanged, but it remains rather spacious for the current level of activity in the market. MACD indicator is growing preserving an unsteady buy signal (located above the signal line). The indicator is trying to consolidate above the zero level. Stochastic, without reaching the level of "20", reverses upwards, responding to the "bullish" dynamics of Tuesday.

Resistance levels: 104.20, 104.50, 104.75, 105.00.

Support levels: 103.90, 103.60, 103.39, 103.25.

Trading tips

To open long positions, one can rely on the breakout of 104.20. Take-profit – 104.75. Stop-loss – 103.90. Implementation time: 1-2 days.

A rebound from 104.20 as from resistance, followed by a breakdown of 103.90 may become a signal for new sales with the target at 103.39. Stop-loss – 104.20.