USD/JPY had an uneventful week, posting slight losses. The pair closed slightly below the 120 level, at 119.62. There are nine events this week. Here is an outlook on the major events moving the yen and an updated technical analysis for USD/JPY.
The mixed NFP report in the US helped the yen hold its own against the US dollar last week. Japanese markets were closed for most of last week, and there were only a couple of Japanese releases.
[do action=”autoupdate” tag=”USDJPYUpdate”/]USD/JPY graph with support and resistance lines on it:
- 10-year Bond Auction: Tuesday, 3:45. The yield on 10 year bonds has been steady, with a yield of 0.37% in the April auction. No significant change is expected in the upcoming release.
- Leading Indicators: Tuesday, 5:00. Leading Indicators is comprised of 11 economic indicators, but is a minor event since most of the data has already been released. The indicator has been very steady and come in at 105.3% in February. More of the same is expected in the March release.
- Current Account: Tuesday, 23:50. Current Account is closely linked to currency demand, as foreigners must buy Japanese yen in order to purchase Japanese goods and services. The deficit narrowed to 0.60 trillion yen in February, within expectations. This was a sharp improvement from the previous reading of 1.06 trillion yen. However, the markets are expecting the deficit to swell to 1.34 trillion yen in the March report.
- Economy Watchers Sentiment: Wednesday, 5:00. This indicator has remained above the 50-point level for the past two readings, indicating slight expansion. The indicator improved to 52.2 points in March, easily beating the forecast of 50.6 points. Little change is expected in the April report.
- M2 Money Stock: Wednesday, 23:50. This indicator has been quite steady, as the pair edged higher to 3.6% in March, matching expectations. An identical reading is expected in the April report.
- 30-year Bond Auction: Thursday, 3:45. The April yield slipped to 1.38%, down from 1.51% in the previous release. Will the yield bounce back up in the May report?
- Preliminary Machine Tool Orders: Thursday, 6:00. This indicator provides a snapshot of the level of activity in the manufacturing sector. The indicator softened to 14.6% in March, compared to 28.9% a month earlier. This was the indicator’s smallest gain since October 2013. Will we see an improvement in the upcoming release?
- PPI: Thursday, 23:50. PPI measures inflation in the manufacturing sector. The index improved to 0.7% in March, within expectations. However, the markets are expecting a sharp downturn in the April release, with the estimate standing at -2.1%.
- Consumer Confidence: Friday, 5:00. This indicator is closely monitored, since stronger consumer confidence usually translates into increased consumer spending, a key component of economic growth. The indicator has been creeping higher, and has posted higher readings for four straight months. The March reading came in at 41.7 points, within expectations. Little change is expected in the April report.
* All times are GMT
USD/JPY Technical Analysis
USD/JPY started the week at 120.14 and touched a high of 120.50. The pair then reversed directions and dipped to a low of 119.05, breaking below support at 119.88 (discussed last week). The pair closed the week at 119.62.
Live chart of USD/JPY: [do action=”tradingviews” pair=”USDJPY” interval=”60″/]
Technical lines from top to bottom:
We begin 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 May. This line has switched to a resistance role, as USD/JPY continues to trade close to the 120 level. It begins the week as a weak line.
118.68 remains a strong support 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
In the US, employment data has been lukewarm, but the markets are expecting the economy to improve in Q2 after a lackluster Q1. Continuing monetary policy divergence could help push the greenback to higher levels.
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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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