THE USDJPY IS CONSOLIDATING BEFORE THE RISE OF VOLATILITY
The USD/JPY price corrected upwards after a gradual decline within a local descending channel. The reason for the recent fall was the increased interest for the defensive assets due to a number of factors, including political instability in the UK after the recent parliamentary elections, a decline in tech stocks in the US and expectation of volatility growth after the Fed’s statement on monetary policy that will be published tomorrow.
Slight influence on the price dynamics may come from the American data on NFIB small business index that shows optimism in small business, which will be published at 10:00 GMT today and the producer price index for the month of May at 12:30 GMT. In order to resume the upward movement with potential of growth to 111.70 - 112.00, the price needs to gain a foothold above the closest high around 110.75. On the other hand, we see the possibility of continued decline after testing the support at 110.30 and the upper boundary of the channel. The trigger for acceleration of the descending movement may come from the breaking of the 109.60 mark. In this case it may possibly reach 109.07 and 108.00.