- The Yen is hopping against the Greenback following a deeper contraction of Japan’s Trade Balance than expected.
- The early week brings little else of note for the USD/JPY ahead of the BoJ’s meeting minutes in the mid-week.
The USD/JPY is slipping from Friday’s close following Japanese trade figures, dipping into 110.50 in early Monday trading.
The Dollar-Yen pair rallied into a three-week high last week on a hawkish US Fed that lifted rates, and the central bank is on its way to posting two more rate hikes in 2018. The move also bumped Treasury yields higher, sending the Dollar gaining against the Japanese Yen.
Japanese export growth reached a four-month high in May, with the year-on-year figure coming in at 8.1%, beating the forecast 7.5% while imports hit 14% y/y, clearing the expected 8.2. With both figures jamming higher than expected, the Japanese Trade Balance cut down sharply to a deficit of ¥578.3 billion, a much steeper slide than the expected deficit of ¥-235 billion.
It’s a limited showing on the economic calendar this week for the JPY, though the Bank of Japan (BoJ) will be dropping their latest Monetary Policy Meeting Minutes late Tuesday at 23:50 GMT. With inflation continuing to slump within the Japanese economy, recent hawks within the central bank are likely to be silenced as the BoJ remains firmly planted on its hyper-easy monetary policy path.
USD/JPY levels to watch
As noted by FXStreet’s own Valeria Bednarik, “technical indicators in the mentioned chart have neared overbought readings, partially losing their bullish strength ahead of the weekly close. According to the 4 hours chart and for the shorter term, the upside is also favored as the pair settled above its 100 and 200 SMA, the Momentum indicator resumed its advance after testing its 100 level, while the RSI indicator maintains its bullish slope around 60.”
Support levels: 110.40 110.15 109.70
Resistance levels: 110.85 111.20 111.45
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