Category: USD JPY Forecast

USD/JPY Forecast May 4-8



USD/JPY gained about 100 points last week and closed just above the 120 line. The upcoming week is very quiet, with just two events. Here is an outlook on the major events moving the yen and an updated technical analysis for USD/JPY.

US numbers looked weak, as Consumer Confidence and Manufacturing PMI reports missed expectations. In Japan, inflation indicators were within expectations.

Updates:

USD/JPY graph with support and resistance lines on it:

USD_JPY_Forecast.May 4-8

  1. Monetary Base: Wednesday, 23:50. The indicator has been on a downward trend, and dipped to 35.2% in March, very close to the estimate. However, this was the smallest gain we’ve seen since May 2013. The downward move is expected to continue in the April report, with an estimate of 34.3%.
  2. Monetary Policy Meeting Minutes: Thursday, 23:50. The minutes provide details of the BOJ’s policy meeting last week. There were no surprises at the meeting, as policymakers  maintained the Bank’s monetary policy stance.

* All times are GMT

USD/JPY Technical Analysis

USD/JPY started the week at 118.92 and dropped to a low of 118.39. The pair then reversed directions and climbed to a high of 120.29, testing resistance at 119.88 (discussed last week). The pair closed the week at 120.03.

Live chart of USD/JPY:


Technical lines from top to bottom:

We start with resistance at 124.16. This line marked the start of a yen rally in June 2007, which saw USD/JPY drop to the 96 level.

122.19 is the next resistance line.

121.39 remains a strong resistance line. It has held firm since mid-March.

119.88 continues to be busy in April. The line switched to a resistance role in April and was tested last week as USD/JPY continues to trade close to the 120 level.

118.68 was tested in support again last week. It is currently a strong  line as the pair trades at the 120 level. The next support line is 117.94.

116.82 has remained intact since mid-January.

115.85 is the final support level for now.

I am bullish on USD/JPY

Japanese markets will be closed for three straight days, so the pair’s movement this week will be heavily dependent on US numbers. The yen has not been able to take advantage of recent weak US releases, as market sentiment remains positive about the yen. The Fed is likely to raise rates later in the year, and the divergence in monetary stance will likely continue weighing on the yen.

In our latest podcast we ask: Did the market get it right on the Fed’s hike? And cover the big upcoming events.

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Further Reading:

USD/JPY Forecast Apr. 27 – May 1

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