The Japanese yen showed some movement last week, but was almost unchanged at the end of the week. USD/JPY closed at 121.14. The upcoming week has seven events on the schedule. Here is an outlook on the major events moving the yen and an updated technical analysis for USD/JPY.
After months of intense speculation, the Federal Reserve raised interest rates by 0.25 percent. The historic rate hike was not dovish, as this small hike is just the start, with plans for additional hikes in 2016. The yen lost ground after the rate hike, but recovered late in the week after the BOJ announced some changes to its monetary policy, including the purchase of ETFs.
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USD/JPY graph with support and resistance lines on it:
- All Industries Activity: Monday, 4:30. This minor indicator has been struggling, posting two straight declines of 0.2%, missing the estimate each time. The markets are expecting much better news in September, with an estimate of +0.9%.
- BOJ Monthly Report: Monday, 5:00. This report contains an analysis of the central bank’s view of economic conditions, as well as data used by board members in making the most recent interest rate decision.
- BOJ Monetary Policy Meeting Minutes: Wednesday, 23:50. Given that the BOJ made some adjustments to its monetary policy at last week’s meeting, the minutes could be especially interesting, and possibly affect the movement of USD/JPY.
- Household Spending: Thursday, 23:30. This important consumer spending indicator has looked dismal, posting four declines in the past five readings. The October reading came in at -2.4%, well off the estimate of 0.0%. Another decline is expected in November, with an estimate of -2.1%.
- Tokyo Core CPI: Thursday, 23:30. This is the most important Japanese inflation indicator, and should be treated as a market-mover. The index posted a flat reading of 0.0% in November, and last posted a gain in June. The estimate for the December report stands at 0.1%.
- SPPI: Thursday, 23:50. Inflation in the corporate sector has been better than CPI but has been slipping. The indicator posted a gain of 0.5% in October, down from 0.6% a month earlier. The weakening trend is expected to continue in November, with an estimate of 0.4%.
- BOJ Core CPI: Friday, 5:00. Core CPI excludes the most volatile items which are included in CPI, and is watched carefully by the BOJ. The indicator came in at 1.2%, and the same gain is expected in the upcoming release.
* All times are GMT
Live chart of USD/JPY: [do action=”tradingviews” pair=”USDJPY” interval=”60″/]
USD/JPY Technical Analysis
USD/JPY opened the week at 120.89 and quickly dropped to a low of 121.14. The pair then reversed directions and climbed to a high of 123.55, as resistance held firm at 124.16 (discussed last week). USD/JPY then retracted, and closed the week at 121.14.
Technical lines from top to bottom:
124.16 was an important cap in late June.
The round number of 123 was tested last week.
121.50 is a weak line of resistance and could see action early in the week.
120.40, which was a swing low in July, is next.
118.55 has held firm since early October. It is the final support level for now.
I am neutral on USD/JPY
The Fed finally pulled the trigger, but the yen managed to hold its own against the dollar as the BOJ surprised with some adjustments to monetary policy. US GDP and the BOJ policy minutes are key events that could have a strong impact on the pair’s movement this week.
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Further reading:
- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For EUR/USD, check out the Euro to Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Australian dollar (Aussie), check out the AUD to USD forecast.
- For the kiwi, see the NZDUSD forecast.
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