Home USD/JPY Forecast Apr. 20-24

USD/JPY reversed directions last week and lost over 100 points. The pair closed at 118.75.  The upcoming week is a quiet one, with  just five events. Here is an outlook on the major events moving the yen and an updated technical analysis for USD/JPY.

The US dollar  lost ground  on disappointing economic  reports, including  retail sales  and housing data. There was better news late in the week  as consumer confidence shot higher. Japanese numbers  were uneventful and there were no surprises from the BOJ minutes.

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

USDJPY_Forecast.Apr 20-24


    1. Tertiary Industry Activity: Sunday, 23:50. This  minor indicator tends rebounded in January with a strong gain of 1.4%, marking a ten-month high. This easily beat the forecast of 1.6%. The markets are expecting a decline of 0.6% in the  February report.
    2. Trade Balance: Tuesday, 23:50. Trade Balance is closely linked to currency demand, as foreigners must purchase Japanese yen in order to buy Japanese goods and services. In February, the trade  deficit jumped to JPY 0.64 trillion, but this was considerably better than the forecast of JPY -1.21 trillion. The estimate for the March release stands at JPY -0.41 trillion.
    3. Flash Manufacturing PMI: Thursday, 1:35. The PMI has dipped in recent readings but remains above the 50-point level, which separates contraction from expansion. In March, the indicator dropped to 50.4 points, well below the forecast of 52.1 points. The markets are expecting a slight improvement in the April report, with an estimate of 50.8 points.
    4. SPPI: Thursday, 23:50. SPPI is a corporate inflation indicator. The indicator has been on a downturn and dropped to 3.3% in February, matching expectations. The markets are expecting the indicator to remain at 3.3% in the March report.
    5. All Industries Activity: Friday, 4:30. The indicator jumped to 1.9% in January, matching the forecast. This was the indicator’s strongest gain since June 2011. However, the markets are expecting the indicator to decline by 0.9% in the February release.

* All times are GMT

USD/JPY Technical Analysis

USD/JPY started the week at 120.20 and quickly  climbed to a  high of 120.84.  The pair then reversed directions,  dropping to a low of 118.56,  breaking below support at 118.68  (discussed last week). USD/JPY closed the week at 118.75.

Live chart of USD/JPY: [do action=”tradingviews” pair=”USDJPY” interval=”60″/]

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. The line held firm as the pair showed some strength late in the week.

119.88 continues  to be  busy in April and has switched to  a resistance  role as the yen  trades at higher levels.

118.68 was tested but recovered and starts the week as a weak support line.

117.94  is an immediate support level.

116.82 has remained intact since mid-January. 115.85 is the next support line.

115.29  is the  final support  level  for now. It  has remained intact since December 2014.

I  am bullish  on USD/JPY

Although recent US numbers have not impressed, analysts expect better news in the spring, and market sentiment remains positive about the US economy. Japan continues to suffer from low inflation, leaving the BOJ little choice but to continue an aggressive monetary policy which continues to weigh on the weak yen.

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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.