Dollar/yen had one of its worst weeks last week, falling 1.9%. The pair briefly broke below the 111 line for the first time since mid-September. It’s a busy week for Japanese indicators, including the BoJ minutes, Tokyo Core CPI and retail sales.
USD/JPY fundamental movers
The yen surged last week, as turmoil in the equity markets was good news for the safe-haven Japanese currency. Investors were disappointed with the Federal Reserve rate statement, which was less dovish than expected. The Fed raised rates for a fourth time at the meeting and indicated that the policy of gradual rate increases would continue in 2019.
The global trade war continues, with the U.S. and China still deadlocked over trade issues. President Trump has declared he will impose further tariffs on China on March 1 unless the parties reach a deal. A breakthrough seems a long shot, so the yen should remain attractive as we move into January.
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
115.55 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 serves as resistance. 114.25 was the high point in November.
114 is a round number and was a stepping stone on the way down. Close by, 113.80 was a resistance line in November.
113.15 was a swing high back in July. 112.25 provided support in early December and it defends the 112 level.
111.65 was a swing low in October and broke through 111.40, another swing low in October (mentioned last week).
110.40 provided support in early September and the pair rallied from that point. 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.
The final level for now is 107.50. This line capped the pair in early April.
USD/JPY Daily Chart
USD/JPY Sentiment
I am neutral on USD/JPY
With investors winding up positions before the end of the year, currency markets will likely be subdued this week. At the same time, high-risk apprehension and the U.S. government shutdown
Our latest podcast is titled What to expect from the Fed, trade, and the Brexit saga
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
Safe trading!
Share
