The USDJPY currency is trading sharply higher during the trading session on Monday as investors priced in lowered fears towards a potential banking crisis following the recent developments in the banking sector. The investors have reacted positively to the measures implemented by several lawmakers and regulators to ensure the stability of their respective banking industries.
The announcement by First Citizens BancShares that it will take over the deposits and loans from the failed Silicon Valley Bank (SVB) helped rejuvenate investors’ appetite towards riskier assets and helped the safe haven currencies shed some recent crisis-driven gains. Even with the number of measures implemented by regulators, the upside could be capped by investors’ cautious approach towards the markets, with the lack of major macroeconomic indicators to be released today.
Technical
The 4H chart shows that the price action USDJPY currency pair, also known as the “Gopher”, is currently trading below the 50-day moving average and has formed a falling wedge pattern. The chart also shows that even though the longer-term trend is a downward trend, the short-term seems to be an upward trend.
For the bullish sentiment, a continued move above the pivot level at 131.115 could signal the presence of buyers and could push the price above the 131.663 resistance level, the level of significance for the bears. The breakout of the falling wedge, supported by volume, could trigger a short-term rally towards the next resistance level at 133.002 but could face increased friction with the lack of major economic indicators to drive the rally.
For the bearish sentiment, a sustained move below the pivot level at 131.115 could signal the presence of a selling momentum in the short term. Thus, a trading opportunity could exist as the price breaks through the support level at 130.815 towards the next resistance level at 129.639.
Summary
The lack of macroeconomic indicators and the movement of the currency pair could be solely driven by the banking industry-related news. Unless there’s adverse banking sector-related news, the bulls could go to the 131.663 resistance as a possible entry point, with the 133.002 resistance being the next level of interest.
Sources: TradingView, Reuters, MT Newswire.
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