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The U.S. dollar enjoyed broad gains last week and Dollar/yen jumped 1.28%. This was the pair’s best week since early October. It’s a busy week in the U.S. We’ll get a look at CPI and retail sales reports, and Federal Reserve Chair Jerome Powell testifies before Congress.

USD/JPY fundamental movers

Japanese household spending slumped as the recent sales tax has taken a bite out of consumers’ pockets. The indicator fell by 4.8% in December, marking a third straight decline. The estimate stood at -1.7%.

In the U.S. there was good news from the manufacturing sector, as ISM Manufacturing PMI rose to 50.9 in January, up from 47.2 a month earlier. This figure beat the forecast of 48.5 points. This marked the first showing expansion since July. The week wrapped up with employment data, which was mixed. Wage growth came in at 0.2%, shy of the estimate of 0.3%. Nonfarm payrolls sparkled with a gain of 225 thousand. This was much stronger than the forecast of 163 thousand.

See all the main events in the  Forex Weekly Outlook

Key news updates for USD/JPY


USD/JPY Technical Analysis

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. 111.69 follows.

110.62 could be under pressure if USD/JPY continues to gain ground.

109.73 is fluid, as the pair ended the week just above this line.

108.70 is providing support.

108.10 last saw action in the first week in January.

107.30 (mentioned last week) has provided support since October 2019. 106.61 is next.

105.55 is the final support level for now.


USD/JPY Daily Chart

USD/JPY Sentiment

I am bullish on USD/JPY

The China coronavirus has hurt risk appetite, which should be bullish for the safe-haven yen. However, the outbreak will likely take a bite out of Japan’s economy, as tourism, services and other sectors have already been damaged by the virus. This could mean trouble for the fragile Japanese economy.

Safe trading!