Analysts are calling the nearby resistance level on USD/JPY as accurate forex signals to sell the pair around the top of the rising channel. The pair has formed higher lows and higher highs, indicating an uptrend on its 4-hour chart.
This rally was sparked by the Japanese government’s decision to implement its first sales tax increase in 17 years, leading many to speculate that the yen is in for long-term losses as Japan deals with more economic drag. This could spark further stimulus from the BOJ (Bank of Japan) if the economy falters while consumer spending weakens after the sales tax hike.
On the other hand, the US dollar is still supported by a relatively upbeat Fed outlook, although Fed Chairperson Yellen previously mentioned that the labor market could use continued support from low interest rates. This is different from her hawkish tone during the FOMC rate statement wherein she hinted that the Fed might be ready to hike interest rates around six months after the asset purchases are over.
Technical Analysis and Accurate Forex Signals
The chart of USD/JPY shows that the pair is approaching the resistance of the channel around the 104.00 major psychological level, which might serve as a ceiling for the recent rallies. Accurate forex signals from experts suggest that price could resume its drop if the non-farm payrolls release in the US comes in weaker than expected. If so, it would confirm Yellen’s stance that the jobs market is in for more weakness and the Fed might delay its potential rate hike by another year.
On the other hand, a very strong US non-farm payrolls release might lead to an upside break of 104.00 as it would show that the economy is on track to recovering most of the jobs lost in the recession. This would put the Japanese yen in a weaker state with its slew of weak economic data and the potential of further BOJ easing. More accurate forex signals could be present after the actual NFP release.
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