Dollar/yen advanced nicely in a turbulent week that saw Trump pushing the dollar up and down, and a mixed message from the Federal Reserve. While the greenback weakened against many currencies, it had a good run against the yen.
USD/JPY fundamental movers
Trump trouble, double-talk Fed
The President got in trouble as his former fixer and confidant Michael Cohen flipped and testified against the President. Former campaign manager Paul Manafort was convicted of tax fraud, faces another trial and may endanger Trump as well.
Trump also sent the dollar lower by criticizing the Fed for raising rates. The Fed remains on course to hike rates in September and probably December. The meeting minutes showed it clearly. However, Fed Chair Jerome Powell said on Friday that the economy is not overheating and that inflation is not accelerating. In addition, Powell conditioned further gradual rate hikes on extended growth. His hesistance weighed.
The greenback got support from the unsuccessful end of the talks between China and the US. The Administration
US GDP, end of month flows
The second release of US GDP is the primary economic indicator of the week. A minor downgrade is on the cards. In addition, watch out for end-of-month flows.
As always, US President Donald Trump’s words deeds will move markets. A week without action from the White House is rare.
In Japan, the Tokyo region inflation figures for August will be of interest, but core prices are likely to remain tame. The BOJ is unlikely to reach its inflation target anytime soon.
See all the main events in the Forex Weekly Outlook
Key news updates for USD/JPY
[do action=”autoupdate” tag=”USDJPYUpdate”/]USD/JPY Technical Analysis
113.15 is the high point seen in July. 112.15 was a swing high early in the month.
111.50 was a swing high in late August. 110.60 supported the pair in late July and remains relevant.
109.70 was a swing low in late August and provides extra support below the round 110 level.
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.
Lower, we find 107.50 capped the pair in early April and is a strong line.
USD/JPY Daily Chart
USD/JPY Sentiment
I am bullish on USD/JPY
The atmosphere may remain upbeat for another week at the end of August before things get worse in the following week.
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Further reading:
- EUR/USD forecast – for everything related to the euro.
- GBP/USD forecast – Pound/dollar projections
- AUD/USD forecast – analysis for the Aussie dollar.
- USD/CAD forecast – Canadian dollar predictions
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