USD/JPY Analysis: US Dollar Above an Important Support

The US Dollar index dropped below 90 with the start of this trading week and remains at the lowest levels, while Gold is traded above $1900. High manufacturing PMI data will be a positive signal for the USD if there is a rise in export volumes. Last month the trade balance showed a growing number of trades in the US, though imports were prevailing and cheaper US Dollar was aimed to shift the ratio towards exports of goods.

Japan’s last week PMI data didn’t show any growth and the country is still fighting the Covid-19 with very strict measures. Despite the dropping number of daily new Covid-19 cases, officials are not planning to ease the lockdown, probably if the cases continue to drop, officials might ease restrictions only after the Olympics. Until then, Japanese yen remains under high pressure.

The 4-Hour USD/JPY chart suggests that the pair may continue the bullish run up to $110.8, if the pair is able to break the $109.7 resistance.

USD/JPY quote on Overbit

As seen on the chart below, the pair lacks momentum and the ascending triangle gets tighter. Closing below the mid-term dynamic support of January 5 will lead to a deeper correction down to $105.78.

USD/JPY quote on Overbit