Current trend
As it was expected, after the correction to the lower border of the ascending channel, the USD went up again. At the end of the last and in first half of this week the "bullish" sentiment prevailed in the pair. Within a few days the pair gained more than 300 points and reached the resistance level 124.00. After a rise in the demand for the yen as a safe haven, a decrease followed, which became the main reason of the pair growth. It is worth noting that long position volumes rose sharply at the lower border of the ascending channel 120.60, as at this level investors started to open carry trade positions.
Moreover, the strengthening of the USD significantly affected the possibility of monetary policy tightening in the nearest months. Yesterday, the US currency was supported by Industrial Production stats and Producer Price Index.
Today particular attention should be paid to the speech of Fed Chair Janet Yellen, as well as to the Labor Market stats.
Support and resistance
We are waiting for the comments and specific signals from Janet Yellen on the future US monetary policy. Even a slight hint at the possibility of tightening could trigger a rise in the demand for the USD.
In the medium term the demand for the US currency is expected to increase which will result in the pair growth to the recent local highs 125.00, 125.70 and a possible breakout with further rise towards the upper border of the ascending channel 127.00. Trading indicators confirm the further upward trend.
Support levels: 123.60, 123.00, 122.60, 122.45, 121.30, 120.60, 120.00, 118.65, 118.30.
Resistance levels: 124.00, 124.30, 125.00, 125.70, 126.25, 127.00.
Trading tips
In this situation build up long positions, but keep in mind that the pair has worked most of the ascending wave and a slight correction is possible.
Regarding the downward correction and further growth, the best entry point is pending long positions at 123.00 with take-profit at 125.70 and stop-loss at 122.20. If the price overcomes 124.30, not opened pending order should be deleted.
