There were no surprises from the Bank of Japan, which maintained its monetary policy. There was some positive news, as bank policymakers raised the bank’s growth projections for fiscal year 2020 from 0.7% to 0.9%. The catalyst for the upward revision was the government’s $120 billion economic package which was announced in December.
In the U.S., the labor market continued to produce solid numbers. Unemployment claims came in at 211 thousand, lower than the estimate of 214 thousand. The indicator has now beaten the forecast for a third straight week. The manufacturing PMI slowed in January, coming in at 51.7 pts. This marked a 3-month low and missed the forecast of 52.4 pts. There was better news in the services sector, as services PMI improved from 52.2 to 53.2, which was above the estimate of 52.9 pts. This marked a 10-month high.
Key news updates for USD/JPY
USD/JPY Technical Analysis
USD/JPY broke below the 110 level on Tuesday and continued to head lower throughout the week.
We start with resistance at 112.73. This line had held in resistance since December 2018.
112.25 is the next resistance line.
111.62 has been a resistance line since April 2019. 110.62 is next.
109.73 remains relevant. It switched to a resistance role as USD/JPY recorded losses last week.
109.35 is an immediate resistance line. It could see further action early in the week.
108.70 is providing support. 108.10 is next.
107.30 (mentioned last week) has provided support since early October 2019.
106.61 is the final support level for now.
USD/JPY Daily Chart
I remain bearish on USD/JPY
The Japanese yen received a boost last week, as risk apprehension soared on reports that the China coronavirus has spread outside the country and even reached the U.S. With investors fearful of a mass epidemic, the safe-haven yen could continue to rally.