The course of trading is strongly influenced by two oppositely directed factors. On the one hand, a bullish rally in the US stock market may support this currency pair, inasmuch as assets are historically correlated with each other. This correlation arose back in the early 2000s, when the Bank of Japan decided to pursue a soft monetary policy, and insofar as the rest of the world’s leading central banks kept interest rates high, the Japanese yen turned into a funding currency in carry trade operations.

Banks and funds use loans in yen to buy high-yielding instruments. On the other hand, the actions of the FRS and the US Treasury increase the surplus of dollar liquidity in the banking system, which in turn has a negative influence on the value of the American currency.

Investment idea: flat 109.00 – 109.90.