USD/JPY Forecast April 29 – May 3 – Dovish BoJ keeps yen subdued

Dollar/yen posted slight losses last week. Japanese events tend not to have a significant effect on the pair, but investors will be keeping a close eye on the FOMC rate statement and nonfarm payrolls.

USD/JPY fundamental movers

Japanese inflation remains well below the BoJ target of 2.0 percent. The bank’s preferred inflation indicator, BoJ Core CPI, remained unchanged at 0.5%. The bank maintained rates at 0.00%, adding that it had no plans to raise rates before the spring of 2020. Retail sales improved to 1.0% in March, up sharply from 0.8% a month earlier.

In the U.S, last week’s numbers were positive. Durable goods orders climbed 2.7%, crushing the estimate of 0.7%. Core durable goods orders gained 0.4%, marking a 9-month high. This was followed by a strong initial GDP release of 3.2% in Q1, well above expectations. This was much stronger than Final GDP for Q4, which came in at 2.2%.

See all the main events in the  Forex Weekly Outlook

Key news updates for USD/JPY

Updates:

USD/JPY Technical Analysis

We start with resistance at 115.55. This line 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 has held in resistance since December.

111.65 (mentioned last  week) was active late in the week.

Close by, 111.40 is providing support. 111.15 has provided support since early April.

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

The global trade war continues to take a toll on the Japanese economy, in particular, the export and manufacturing sector. With the BoJ continuing its dovish stance, the safe-haven yen could remain listless unless risk apprehension jumps.

Further reading: