The USDJPY currency pair opened today, May 12, with a significant gap above Friday's closing price, reaching the 146.00 level. At the time of writing, the gap remained less than halfway closed. The 146.00 level, which acted as support in early April, has now become a resistance level. A pullback from 146.00 to at least 145.00 is highly probable.
The MACD (Moving Average Convergence/Divergence) indicator on the daily timeframe is below the zero level. This shows a weakening downtrend, though it is far from its completion.
The 50-day exponential moving average, where the price of the currency pair is currently located, may also act as resistance.
The US Dollar Index (DXY), which measures the value of the US dollar against six major currencies, fell to 100.3 after reaching a local peak at 100.86. This reflects growing market skepticism about the broader America's economic outlook and its trade policies.
The US economic outlook remains mixed. Federal Reserve officials emphasize the risk of stagflation. Higher tariffs could disrupt global supply chains, increase inflation, while potentially slowing economic growth and raising unemployment. The market remains wary. Recent data points to the risk of severe difficulties for the US economy if trade tensions escalate.
In Japan, recent data positively surprised market participants. Total household spending for March rose 2.1% year-on-year, well above the 0.20% growth forecast and in sharp contrast to the 0.5% decline in the previous month. This improvement in consumer spending is a positive sign for the Japanese economy, potentially reducing pressure on the Bank of Japan to raise interest rates.
Trading strategy option: sell at the current price with Take profit at 145,000 and a Stop loss at 146,800.
This content is for informational purposes only and is not intended to be investing advice.
