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The Japanese yen enjoyed its strongest week since July as Dollar/yen fell 1.2 percent. The pair closed just above the 108 line, as the yen capitalized on a broadly-weaker U.S. dollar. This week’s highlights are U.S nonfarm payrolls and wage growth.    

USD/JPY fundamental movers

The U.S released the Federal Reserve minutes on Friday.  Policymakers said they expected rates to remain steady “for a time”, but did note continuing downside risks to the U.S. economy due to global trade tensions. ISM Manufacturing PMI slipped to 47.2 in December, down from 48.1 a month earlier. This was shy of the estimate of 49.0 and the weakest reading since June 2009.

See all the main events in the  Forex Weekly Outlook

Key news updates for USD/JPY


USD/JPY Technical Analysis

We start with resistance at 111.62, which has held in resistance since April. 110.62 is next.

109.73 faced strong pressure in December, but USD/JPY failed to break above this line.

109.35 has switched to a resistance role after sharp losses by USD/JPY last week.

108.70 is next in resistance.

108.10 is fluid. Currently, it is just above the pair.

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

106.61  is next.

105.55 has held in support since late August.

104.65 has held firm since January. It is the final support line for now.


USD/JPY Daily Chart

USD/JPY Sentiment

I am bearish on USD/JPY

It should be an interesting week, as the markets take stock of the U.S. airstrike which killed an Iranian general on Friday. If risk appetite falls, the safe-haven yen could be a big winner and continue its rally.

Further reading:

Safe trading!