Trump Agrees To Make Return Visit To China
Chinese President Xi Jinping is on an official visit to the US. On Friday, the US president Donald Trump accepted his invitation to visit China. Will the Japanese yen increase in case of rapprochement between the US and China? The growth of the USD/JPY means its weakening.
Let us recall, that previously, Donald Trump accused China of destroying the US business and threatened to impose a 45% tax on Chinese goods. In response, China announced that it would create a free trading zone with the European Union and organize a “Silk Road” transport corridor. Regarding the Forex market, there should be noted a significant growth of the dollar index on Friday. It occurred despite very weak data on the US labor market.
Theoretically, they delay the moment of the next Fed rate hike. However, the dollar strengthened. Investors positively accepted the statement of the New York Fed president Robert Dudley that the Fed was going to start a reduction of its balance sheet currently amounting to $4.5 trillion. It should be noted that on Monday, April 10, 2017, early in the morning important economic data will come out in Japan: current account balance for February. In January, its surplus was minimal over the last 3 years. In our opinion, the February indicator may also be relatively weak.
USD/JPY Daily Chart
On the daily timeframe USD/JPY: D1 is trying to correct up in a descending channel. The further price increase is possible in case of weak economic data in Japan.
- The Parabolic indicator gives bearish signals. It may be used as an additional resistance level which needs to be exceeded to open an upward position.
- The Bollinger bands® have widened, which means higher volatility.
- The RSI is below 50. It has formed a positive pergence.
- The MACD gives bullish signals.
The bullish momentum may develop in case USD/JPY exceeds the last fractal high and the Parabolic signal at 112.2. This level may serve as the entry point. The initial stop-loss may be placed below the two last fractal lows at 110.1. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop level at 110.1 without reaching the order at 112.2 we recommend cancelling the position: the market sustains internal changes that were not taken into account.
Summary of technical analysis:
Position: BuyBuy stop: 112,2Stop loss: 110,1