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As usual, on Mondays, I try to analyze all four major currency pairs. Next in line, perhaps, is one of the most interesting and at the same time mysterious currency pairs – dollar/yen. The main mystery lies in the fact that both the US dollar and the Japanese yen are safe-haven currencies. I think it’s no secret that due to the events in Ukraine, market participants are not up to risks now. Preferences are given to protective assets since military actions on the territory of Ukraine can disrupt the already unbalanced supply chain, which has been negatively affected by the COVID-19 pandemic. Refugees from Ukraine are arriving in the European Union (and not only), the number of which is so large that it is compared to the migration crisis of the Second World War. At the same time, the main contingent of migration persons is women and children. In Ukraine, the male population from 18 to 60 years old is prohibited from leaving the country. Nothing can be done – general mobilization.
European Commission President Ursula von der Leyen has promised that the European Union will allocate about 500 million euros to help Ukrainian refugees. In general, the situation, of course, is terrible. Over the past ten days, about one and a half million people have left Ukraine. In addition to the EU countries, Ukrainians are fleeing to the border of Moldova, where they receive all kinds of assistance. In turn, Russia is simply covered with all kinds of sanctions, from which not only the Russian Federation suffers, but also those who impose these sanctions. Naturally, all these sanctions and unprecedented pressure come from the direct supply of the United States of America. But that’s not the point now. Since both currencies in the USD/JPY pair are safe-haven currencies, investors have a reasonable question – which safe-haven to go to? We are looking at the charts of the USD/JPY pair, perhaps the answer to this question will be found there.
As you can see, the pair has been trading in the selected range for eight weeks in a row. On this timeframe, no progress is yet visible, but on the monthly one, who is interested, look at the last two candlesticks, which demonstrate the inability of the players to continue to fulfill their mission, that is, to move the course up. As for the weekly timeframe, then nothing good can be seen for the bulls on USD/JPY. Last week, the pair ended with a decline, and trading closed under the red line of the Tenkan Ichimoku indicator. Nevertheless, in my opinion, until there was a true breakdown of the support level of 113.50, it would be premature to assume that the upward trend for the pair has been completed. It will be possible to talk about the continuation of the bullish scenario only after the true breakdown of the sellers’ resistance 116.36. Let me remind you that the breakdown is considered true only after fixing above or below the broken level or line. If we summarize the consideration of the weekly chart, there are no obvious signals yet. Nevertheless, the author of this article is more inclined to assume a downward scenario.
On the daily chart, you can see in all its glory the impact of candle analysis. After the appearance of the “Shooting Star” reversal candle model, despite the fairly positive data on the US labor market, which came out last Friday, the pair sank significantly. It can be seen that market participants are more concerned about geopolitics than macroeconomic data, and such important ones as Nonfarm. During the decline, the Tenkan and Kijun lines of the Ichimoku indicator were passed, as well as the 50 simple moving average. The upper boundary of the Ichimoku cloud stopped the bears’ pressure. If we turn to trade recommendations, then, in the personal opinion of the author, it’s time to prepare for USD /JPY sales. Since the bulls on the pair are likely to attempt to raise the rate, I suggest looking for options to open short positions after short-term rises in the price area of 115.00-115.30. At the moment, this is the main trading recommendation. I am sure that this week we will return to the analysis of USD/JPY and, if necessary, make adjustments and (or) additions to the trading recommendations.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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