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The Japanese yen had an uneventful week, as the pair remained close to the 107.50 line. This week’s highlights include rate decisions from the Federal Reserve and the Bank of Japan. As well, the U.S. releases GDP for Q1, which is expected to decline by 3.9 percent.

USD/JPY fundamental mover

Japan posted a trade deficit of JPY 0.19 billion, higher than the estimate of JPY -0.11 billion. This followed a rare surplus a month earlier. Manufacturing continues to contract, as the Manufacturing PMI slowed for a third successive month, falling to 43.7 points. Inflation levels remain weak, as Core CPI fell to 0.4%, down from 0.6 percent. This was its lowest level in five months.

In the U.S., unemployment claims continue to reflect the extent of the economic turmoil caused by Covid-19. Jobless claims dropped to 4.4 million, down from 5.5 million a week earlier. In the past five weeks, new claims have totaled a staggering 26 million, as the Covid-19 crisis has shut down much of the U.S. economy. There was more bad news from March durable goods orders, which plunged by 14.4%, its first decline in four months. The core reading declined by 0.2%, after a decline of 0.6%. The UoM Consumer Sentiment slumped to 71.8, down sharply from 89.1 a month earlier. Still, this beat the estimate of 67.8 points.

See all the main events in the  Forex Weekly Outlook

Key news updates for USD/JPY


USD/JPY Technical Analysis

We start with resistance at 110.62.

109.73 is protecting the 110 level, which has psychological significance.

108.70 (mentioned last week) is next.

108.10 is a weak resistance line.

107.30 remains an immediate support level. It could see action early next week.

106.61 has held in support since mid-March. 105.55 follows.

104.65 is the final support line for now.


USD/JPY Daily Chart

USD/JPY Sentiment

I remain bullish on USD/JPY

Corvid-19 has ravaged the world economy, but investors remain optimistic that the U.S. will be able to rebound more quickly that other countries. This bodes well for the U.S. dollar against its major rivals.