The USDJPY is benefitting from market performances in Asia and Europe, as well as news of possible further stimulus from the People’s Bank of China (PBoC). Markets in Asia and Europe were able to claw back on losses of yesterday to end in positive territory, which set the pace for today’s performance on the USDJPY as risk-off sentiment waned. A Reuters report also quoted two Chinese insiders who are close to the government’s policy-making process as saying that policymakers are readying further stimulus measures to ease the pressures on sectors that could suffer from the coronavirus outbreak.
According to the insiders, measures that could be on the cards include:
Lowering the GDP target of 6%
Further loosening of monetary policy
Additional policy support for sectors such as logistics, transportation, retail and hospitality will also be provided.
The USDJPY continues its advance above 109 and technical parameters on the chart may support this move. The daily candle for today has pushed off the support level at 109.307 (lower border of the ascending channel) and is targeting the resistance seen at 109.704. There is a previous high that occurred on 20 May 2019, which intersects the upper channel border at the 110.60 price level. This price top also meets the upper boundary of the large symmetrical triangle that encases multi-year price activity. 110.60 remains a viable price target in the short-term and medium-term and further upside momentum that takes the USDJPY out of this triangle could push price activity towards 111.94 and 114.06.
On the flip side, rejection at any of the resistance targets mentioned above could cause the USDJPY to retest the critical price levels below such rejection points. A possible rejection at 109.70 leads to a retest of 109.30 or 108.42, in that order. 107.82 and 106.64 lurk below and could come into the picture with further downside action.