USD/JPY Forecast December 2-6 – Dollar Pushes Above 109

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Dollar/yen posted considerable gains last week. Investors are keeping an eye on Japanese inflation and retail sales reports. 

USD/JPY fundamental movers

Japanese inflation indicators were within expectations. However, industrial production disappointed with a sharp decline of 4.2%, after a gain of 1.4%.

In the U.S., there was positive economic news last week, as second-estimate GDP increased at an annual rate of 2.1%, which was higher than the 1.9% estimate. Analysts had expected that the GDP reading would confirm the initial release of 1.9%, and the upward revision was a pleasant surprise for investors. The Core PCE Price Index, which is the Federal Reserve’s preferred inflation gauge, posted a weak gain of 0.1%, shy of the estimate of 0.2%. This points to weak inflation, which means that the Fed could greet the markets with another rate cut early in 2019, without having to worry about causing high inflation.

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Key news updates for USD/JPY

Updates:

USD/JPY Technical Analysis

We start with resistance at 112.25.

111.62 was last active in April. 110.62 is next.

109.73 has held in resistance since the end of May, but is under strong pressure. 109.35 is close by.

108.70 has switched to a support role after gains by USD/JPY last week. 108.10 is next.

107.30 (mentioned last week) switched to support in early October.

106.61 is next.

105.55 has held in support since late August. It is the final support level for now.

USD/JPY Daily Chart

USD/JPY Sentiment

I am neutral on USD/JPY

The U.S. and China have yet to reach an agreement on the trade front, which is keeping risk appetite in check. The Japanese economy remains weak, and it will likely take a rise in risk apprehension in order for the yen to gain ground.

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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.