On Tuesday USD / JPY shows moderate growth on the background of somewhat better market sentiment as USD dollar continued to display some gains, but in general this market outlook seems uncertain and we retain careful outlook for this market which means staying flat.
Traditionally in addition to USD dollar, a very strong influence in USD / JPY pair is provided by equity markets which now retains a side direction and rather mixed sentiment. If at the beginning of the week positive sentiment prevailed on the market, today equities are traded under pressure thus influencing the market of Japanese currency contributing to the development of a moderate decline in USD / JPY. Earlier today Japanese Nikkei 225 closed the day with a decline around 0.2%, the Chinese Shanghai Composite lost in price about 0.42%. European indices are also still in the red and futures for US indexes are retreating as well. Since till the end of the week, no important events are expected on the market that could disrupt the overall alignments of power for this market , the current sideways trend of USD / JPY pair may continue.
In the technical picture and on the chart, the main range of movement for USD / JPY currency pair can be designated by levels 107.80-109.00. Yesterday, the price tested the strength of the upper end of the range, and then the price rebounded down. Accordingly, we now consider a scenario with the development of a moderate downward movement with the target around 107.80. It will be possible to consider the prospects for further growth only after the price consolidates above 109.00. We recommend staying out of the market and watching the development of the situation.
Our recommendations: out of the market