DEMAND FOR DEFENSIVE ASSETS WAS ABLE TO OFFSET THE WEAK GDP DATA IN JAPAN
The USD/JPY price has shown a sharp decline despite weak statistics on GDP growth in Japan for the first quarter. The third largest economy in the world expanded by only 0.3% which is twice less than expected. Previous reading was at the level of 0.5%. On the other hand, the support for the yen has come from strong data on the current account balance of the country, the surplus of which was 1.81 trillion yen in April against the expected 1.62 trillion yen. The USD/JPY quotes are under pressure due to increased demand for safe haven assets like the yen before the hearings at which the former FBI director will testify on the case of Donald Trump’s interference in the investigation concerning members of his administration. Political uncertainty in the UK that is due to today’s parliamentary elections is also making traders nervous. Lately the USD/JPY could not overcome the important 110.00 mark and retreated to the upper boundary of the descending channel that it left earlier. In case of further decline, closest support lines will be at 109.07 and 108.00. Should growth resume and gain a foothold above 110.00 price we may see continued growth up to 110.30, 112.00 and 113.15. The MACD histogram growth points to a possible continuation of the current upward impulse.