USD/JPY: buy on the dips
At the end of last week USD/JPY moved up as the US dollar was supported by the good US labor market data. On the weekly chart the pair formed a big rising candle which has engulfed the previous one.
Despite this advance, consolidation isn’t over yet. On the daily chart the pair remains inside the Ichimoku Cloud which has been holding the bulls since the beginning of January.
On Monday yen was helped by the bad China’s trade data which has worsened the market’s risk sentiment. However, US dollar is still in demand, US Treasury yields rise, so the greenback will likely find support soon and rise up. The main strategy is to buy USD/JPY on the dips.
Resistance is at 119.30 and 120.00. Above the psychologically important level of 120 yen, the target will be at 121.83. Support is at 117.30. The next support levels are at 116.90 and 115.55.
Once again there won’t be a lot of news from Japan – only the index of activity in the service sector on Tuesday and core manufacturing orders on Thursday. Chinese figures on Tuesday will also have an impact on the pair.