USD/JPY Forecast Jan. 21-25 – Yen slips as risk appetite remains strong


Dollar/yen, climbed over 1 percent last week, the pair’s best week since last October. Risk appetite has improved in January, putting a halt on the yen’s impressive rally in December. The BoJ will wrap up its first policy meeting, and investors will be keeping an eye on rate statement and and follow-up remarks from BoJ Governor Kuroda.

USD/JPY fundamental movers

The Federal Reserve proved to be aggressive in 2018, hiking rates four times, including in December. However, the Fed has surprised the markets with a suprisingly dovish stance since the December hike. This has improved risk appetite and sent the equity markets higher, at the expense of the safe-haven yen. Just a few months ago, there was talk of three or four rate hikes in 2019. Now the Fed is saying it will think long and hard before raising rates, and some analysts have even predicted a rate cut late in the year.

The U.S-China trade war has rocked the stock markets and hurt Japan’s exports to U.S. and Chinese markets. There is, however, optimism that the conflict could ease, with President Trump sounding positive about the talks. A second round of negotiations is scheduled for January 30 in Washington, and investors remain optimistic that trade tensions will ease.

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Key news updates for USD/JPY


USD/JPY Technical Analysis

With USD/JPY posting strong gains last week, we start at higher levels:

112.73 was an important resistance line in October.

112.25 provided support in early December and it defends the 112 level.

111.65 was a swing low in October, Close by, 111.40 was another swing low in October.

110.40 is next. Below, 109.70 was a swing low in late August and is protecting the symbolic 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.

107.50 capped the pair in early April.

105.66 was tested earlier in January as the pair dropped sharply.

USD/JPY Daily Chart

USD/JPY Sentiment

I am bullish on USD/JPY

Risk appetite has improved in 2019, helping boost USD/JPY. The U.S. has threatened addtional tariffs against China in March, but investors remain hopeful that talks will continue and the new tariffs can be avoided. The U.S government shutdown has become the longest ever, but lawmakers will have to reach a compromise or risk the wrath of voters.

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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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