Is it worth selling a dollar against the yen?

All attention for today will focus on the US Federal Reserve and more specifically to the long-awaited press conference of the head of the US central bank, Jerome Powell. No one is expecting rate changes and market participants are interested in both of the economic forecasts and Powell's comments.

Considering the current situation, we need to monitor every step of the dollar today. We should also not lose sight of the dynamics of the yield of US state bonds. In the past few weeks, the USD/JPY pair almost never leaves the narrow range of 111.00-112.00. For some unknown reason, the dollar decided not to react to the political baton of successive polls on the UK leaving the EU. In addition, he ignored the worst report in 17 years on China's industrial production, as well as the decision of Donald Trump to postpone a meeting with his Chinese counterpart Xi Jinping. Recall that the audience was expected to sign a bilateral trade agreement between the countries.

It seems that traders needed other fundamental drivers and Powell's upcoming press conference is more than suitable for this role. Market participants believe that the main blow to the dollar will be caused by Fed officials, who are likely to report on a wait-and-see attitude and unwillingness to multiply raise rates during 2019. An excellent prelude to such comments could be the deterioration of estimates of economic growth in America for this year, as a result of heightened risks in the sphere of world foreign trade.

The dollar in this situation will very quickly be among the outsiders with the potential for closing the day below 111.00.

What do analysts think?

Justifying the sale of the dollar against the Japanese yen at Westpac, taking a short position in the US dollar should be based on the fact that the spot market was not able to break through the resistance of 112.00-112.50, according to market strategists. The recommendation from Westpac is as follows: sale from 111.90 with a target at 110.10 and a stop order at 112.55.

Experts also named the reasons that prompted them to adhere to such a strategy, namely:

• The Brexit negotiation up to March 29 will negatively affect risk sentiment.
• At the moment, the positive effect of the result of the US-PRC trade negotiations cannot be calculated and take into account.
• The Fed will definitely sound in "soft" colors and they will confirm willingness to exercise patience in raising rates.

Meanwhile, the USD/JPY pair opened with growth today, testing the resistance level of 111.67. Some analysts do not exclude that in the future, the pair will move to 113.00 after a breakdown in this level.

The material has been provided by InstaForex Company - www.instaforex.com