Introduction:
The USD/JPY pair has been experiencing an upward trend for a while now, and according to analysts at UOB Group, this trend is expected to continue. In their analysis, the experts pinpoint the 134.80 resistance level as the next target for the pair’s upside momentum. In this article, we will delve deeper into the factors that are driving this movement and what traders should expect in the coming days.
Factors Driving the USD/JPY Movement:
The USD/JPY pair is one of the most actively traded currency pairs in the world. The movement of the pair is influenced by a variety of factors, including economic indicators, geopolitical events, and central bank policies. In recent weeks, the following factors have been driving the USD/JPY movement:
US Inflation Data:
The US economy has been recovering from the pandemic, and with the rollout of vaccines, many economic indicators have been showing signs of improvement. However, one of the key concerns for investors has been the rise in inflation. Recent data has shown that inflation has been rising faster than expected, which has put pressure on the Federal Reserve to consider raising interest rates. If interest rates do rise, this could lead to a strengthening of the US dollar, which could further drive the USD/JPY pair upward.
Japanese Economic Policies:
The Bank of Japan has been implementing policies to boost the country’s economy, including a negative interest rate policy and quantitative easing. However, these policies have not had the desired effect, and the Japanese economy continues to struggle. This has led to a weaker yen, which has further strengthened the USD/JPY pair.
Geopolitical Events:
Geopolitical events can also have a significant impact on the movement of the USD/JPY pair. Recently, tensions between the US and China have been escalating, which has put pressure on the yuan. As a result, investors have been turning to the US dollar, which has strengthened the USD/JPY pair.
What Traders Should Expect:
Given the factors driving the USD/JPY pair’s upward momentum, traders can expect the pair to continue rising towards the 134.80 resistance level. However, it is important to note that the pair is also facing some resistance at the 109.50 level, which could lead to some temporary pullbacks. Traders should also keep an eye on any new economic data, as this could impact the pair’s movement.
Conclusion:
The USD/JPY pair is expected to continue its upward momentum towards the 134.80 resistance level, driven by factors such as US inflation data, Japanese economic policies, and geopolitical events. Traders should keep an eye on new economic data and any temporary pullbacks at the 109.50 resistance level. As always, it is important to practice risk management when trading and to consult with a professional financial advisor if needed.
