USD/JPY Forecast April 22-26 – Bank of Japan in spotlight

Dollar/yen was almost unchanged last week, after a 3-week rally by the pair. Japanese events tend not to have a significant effect on the pair, but investors will be keeping a close eye on U.S. durable goods reports and Advance GDP.

USD/JPY fundamental movers

The Bank of Japan has held the course with monetary policy, and it’s unlikely we’ll see any change from the BoJ, which will set interest rates and release a monetary policy statement. Inflation remains well below the BoJ target of around 2 percent, and the global trade war has taken a toll on the manufacturing and export sectors.

U.S. numbers enjoyed a solid week. Consumer spending rebounded in March, after posting declines in February. Retail sales jumped 1.6%, above the estimate of 0.9%. Core retail sales gained 1.2%, beating the forecast of 0.7%. As well, unemployment claims sparkled with a reading of 199 thousand. This was only the second reading below the 200-K level in 2019.

See all the main events in the Forex Weekly Outlook

Key news updates for USD/JPY

Updates:

USD/JPY Technical Analysis

115.55 was a high point in the first half of 2017 and remains an upside target. 114.60 was the high point in early October and has held in resistance since then.

114.25 was the high point in November. Close by, 113.80 was a resistance line in November.

113.15 was a swing high back in July.

112.73 was an important resistance line in October.

112.25 (mentioned last week) has held in resistance since December.

111.65 was active early in the week.

Close by, 111.40 is providing support. 111.15 follow in support.

110.40 is next.

109.35 was a cushion in mid-July.

108.70 was a cushion early in the summer and 108.10 was a swing low in late May.

USD/JPY Daily Chart

USD/JPY Sentiment

I remain bullish on USD/JPY

With the Japanese economy feeling the squeeze of the U.S.-China trade war and the BoJ offering negative interest rates, there isn’t much to attract investors to the yen unless risk appetite drops sharply. Trade talks between China and the U.S. are continuing, but last week a U.S. official said that an agreement could be months away. Still, any progress between the sides would be good news for the export-dependent Japanese economy.

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