USD/JPY Forecast Feb. 11-15 – Yen drift continues

Dollar/yen was almost unchanged for a third successive week. Will the lack of activity continue? The key event in the upcoming week is Japanese  Preliminary GDP for the fourth quarter.

USD/JPY fundamental movers

Investors remain jittery over the ongoing U.S-China trade slugfest. The Chinese economy has experienced a slowdown, which has dampened the Japanese export sector and weighed heavily on the manufacturing sector. The markets lost ground last week after President Trump said he would not be meeting with Chinese President Xi before a March 2 deadline, when further U.S tariffs are scheduled to commence. Although the sides have been negotiating, there have been no indications of progress towards a trade deal.

President Trump’s state of the Union speech was a yawner for the markets, with plenty of rhetoric but short on substance. However, Trump did announce that he would meet with North Korean president Kim in the last week of February. If the meeting is more than a photo-op, risk appetite could improve and weigh on the safe-haven yen.

See all the main events in the Forex Weekly Outlook

Key news updates for USD/JPY

USD/JPY Technical Analysis

With the yen continuing to show little movement, our technical analysis remains unchanged:

We start at 112.73, which was an important resistance line in October.

112.25 provided support in early December and it defends the 112 level.

111.65 was a swing low in October, Close by, 111.40 was another swing low in October.

110.40 is next. Below, 109.70 (mentioned last week) was a swing low in late August and is protecting the symbolic 110 level. This line was busy throughout the week.

Close by, 109.35 was a cushion in mid-July. 108.70 was a cushion early in the summer and 108.10 a swing low in late May.

107.50 capped the pair in early April.

105.66 was tested earlier in January as the pair dropped sharply.

USD/JPY Daily Chart

USD/JPY Sentiment

I am neutral on USD/JPY

Investors remain somewhat cautious, which has kept the safe-haven yen subdued for the past several weeks. Trade tensions between the U.S. and China continue, and if there are signs that the U.S. will impose further tariffs on March 2, investors could flock to the safe-haven yen.

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