Home USD/JPY Outlook September 23-27

USD/JPY  lost ground during the week, but the pair then recovered these losses, and  ended the week with modest gains. The pair closed the week at 99.33. This week’s highlight is Tokyo Core CPI. Here’s an outlook for the Japanese events and an updated technical analysis for USD/JPY.

The yen showed some strength in mid-week, following the non-taper announcement by the Federal Reserve. The  dollar  received a boost from strong US    releases last week, highlighted by US Unemployment Claims. Manufacturing and housing numbers were also strong.

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USD/JPY daily chart with support and resistance lines on it. Click to enlarge:USD JPY Outlook Sep. 23-27th

  1. Corporate Services Price Index: Tuesday, 23:50. Japan continues to post trade deficits, and the July release ballooned to -0.94 trillion yen compared to -0.60 trillion the month before. The markets are expecting an improvement in September, with an estimate of -0.81 trillion yen.
  2. Tokyo Core CPI: Thursday, 23:50. Kuroda will address a securities conference in Tokyo. Analysts will be looking for clues as to future monetary policy and interest rate moves by the BOJ.
  3. National Core CPI: Thursday, 23:30. The markets have done a good job of providing accurate predictions for this indicator. The July reading posted a -0.6% decline, which matched the forecast. The markets are anticipating an improvement for the August reading, with an estimate of a gain of +0.3%.

* All times are GMT

USD/JPY Technical Analysis

USD/JPY  started the week at 99.00. The pair  dropped sharply, touching a low of  97.76, breaking through support at 97.80 (discussed  last week).  USD/JPY then reversed direction and  touched a high of 99.67.  The pair  closed the week at 99.33.
Live chart of USD/JPY: [do action=”tradingviews” pair=”USDJPY” interval=”60″/]
Technical lines from top to bottom

We  begin with resistance at the round number of 104. This was a key line in May 2008. At that time, USD/JPY was in the midst of a rally which saw the pair climb as high as 110.

102.50 was an important resistance line  in late May but has not been tested since that time.

101.44 was the post-crisis high seen in April 2009, and has not been tested since mid-July. 100.85 was busy in July as the dollar pushed above the 100 level. This line held intact as the pair pushed into 100-territory this week.

The significant 100  line  has seen action in September and continues to provide resistance. Will it face more action in the coming week?

98.90 was briefly breached as the yen climbed higher, but remained intact at the end of the week.  It is a weak line and could face pressure early this week.

97.80  is  next. This line was  quite busy  in June and in late July and was breached last week as the pair dropped sharply before bouncing higher.

96.71  continues to provide strong support. This is followed by the  round number of 95, a psychologically significant  line.  This line has held firm since mid-June.

The final support level for now is 93.79. This line  marked the low point of  a rally  by  USD/JPY which started in mid-June and saw the  pair climb to the mid-101 range in July.

I  am  neutral on USD/JPY

It was a busy week for the pairUSD JPY Outlook Sep. 23-27th, as the US dollar dropped sharply against the yen but then recovered these losses. US releases looked sharp last week, and the improving US economy bodes well for the dollar. At the same time, the Japanese economy has been picking up steam, and if this week’s inflation numbers are strong, the yen could gain ground.

Further reading:

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.