USD/JPY Forecast Aug. 17-21 – Dollar gains ground, Japanese GDP next

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Dollar/yen moved higher, as the pair enjoyed its strongest week since June. On the fundamental front, Japan releases GDP for the second quarter, with analysts braced for a decline of 7.5%.  Japan’s trade deficit is expected to narrow to JPY 0.10 trillion. In the US, the Federal Reserve releases the minutes of its August policy meeting and we’ll get a look at Manufacturing PMI.
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USD/JPY fundamental mover

Japanese releases were all tier-2 last week. The current account surplus widened to 1.05 trillion, up from 0.82 trillion. This marked its highest level in four months.

In the US, consumer inflation was unchanged at 0.6% in July. The core reading improved to 0.6%, up from 0.2% beforehand. There was good news on the employment front, as unemployment claims fell to 963 thousand, down from 1.186 million. This marked the first time that new claims have fallen below the 1-million mark since mid-March, before the spread of Covid-19. Retail sales reports were mixed. The core reading came in at 1.9%, above the estimate of 1.3%. However, the headline read posted a gain of 1.2%, shy of the estimate of 2.0%.

See all the main events in the Forex Weekly Outlook

Key news updates for USD/JPY

Updates:

USD/JPY Technical Analysis

109.73 (mentioned last week) is protecting the 110 level, which has psychological significance.

108.30 has provided resistance since early June.

107.22 is next.

106.05 is providing support.

105.13 is next.

104.29 has some breathing room in support.

103.52 is the final support line for now.

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USD/JPY Daily Chart

USD/JPY Sentiment

I remain neutral on USD/JPY

Both the US dollar and the Japanese yen are safe-haven assets, but investors have shown a surprising sentiment towards riskier currencies, despite the Covid-19 pandemic. If this trend continues, it could be a quiet week for the pair.

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About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

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