By Janis Macukans Head of Analytics Unit, Dukascopy Bank SA
By Janis Macukans Head of Analytics Unit, Dukascopy Bank SA

USD/JPY fundamental events match technical chart

Dukascopy Analytics has been paying attention to the movements of the US Dollar against the Yen since the start of June. It was apparent that the pair’s fluctuations on charts perfectly matched with and respected the borders of a simple channel pattern. 

USD/JPY fundamental events match technical chart

Dukascopy Analytics has been paying attention to the movements of the US Dollar against the Yen since the start of June. It was apparent that the pair’s fluctuations on charts perfectly matched with and respected the borders of a simple channel pattern. 

Initially, the rate bounced off this pattern on May 21, thus resulting in a decline. This movement was matched from the fundamental side with concerns over the approaching Singapore summit between the US President Donald Trump and the North Korean leader Kim Jong-Un. The rate increased its daily volatility when the US Dollar retreated.

The given decline ended as soon as it was clear that the summit would take place. Coincidentally, the rate’s decline reached a combined support cluster near 108.00 on May 29. 

However, the pair did manage to pierce this support that resulted in two days of horizontal fluctuations near the bottom channel line. This lingering around the trend-line ended simultaneously with the media stopping any doubts about the Singapore summit actually taking place.

This caused a surge from the support line up to a strong resistance cluster formed by the 200-day simple moving average, one of the weekly pivot points and the 61.80% Fibonacci retracement level near 110.20. This cluster held the rate down throughout the whole week.

Following the joint statement of the Unites States and North Korea on June 12, USD/JPY pierced the above resistance cluster. It was a clear indication of further advance. 

Dukascopy Analytics used its own methodology of combining various simple methods of technical charting to provide guidance while the Buck gained momentum against its Japanese counterpart.

At the time of writing, the expected surge was set to be supported by the 55- and 200-day SMAs and the lower trend-line of the ascending channel. 

This appreciation could be slowed down by various weekly and monthly pivot points. 

Eventually, the rate should face the upper channel line near 111.50 which represents the Greenback’s decline against the Yen since the beginning of 2017.