Is this the first exploratory move before the big break? Or just a false one before a downfall? USD/JPY topped the 114.50 level it reached in July and hit a new high of 114.73, the highest level since March this year.
However, these levels were not really sustained and we are back under 114.50. What’s next? Support awaits at 113.50, followed by 112.70. Resistance above 114.50 is at 115.35.
The rises in the pair come as US President Donald Trump is in Tokyo. Trump met Japan’s Prime Minister Shinzo Abe, slamming the latter for what the president describes as “unfair tradeâ€. He wants free and reciprocal trade and says it isn’t like this right now. Japan said that its share of the US papers is only 9.3% while Japanese firms employ some 860K people in the US.
They also discussed the issues with North Korea with Abe saying they should “shoot down North Korean missiles†if necessary. Trump said that the “strategic patience†is over. It is hard to draw a direct link from the meeting in Tokyo and the move. The dollar has been on the rise already beforehand.
In addition, the Governor of the BOJ, Haruhiko Kuroda, spoke and defended his efforts to achieve the 2% core inflation target which seems very elusive. He said that the current program to control the yield curve should be enough to hit the target. This comment may have weighed on the yen and prevented further gains.
Here is the move on the daily chart:
