USD/JPY Forecast July 15-19 – Yen remains quiet as investors eye Fed rate cut

Dollar/yen was uneventful last week, posting moderate gains. There are only a handful of Japanese events this week, so the focus will be on U.S. indicators. This week’s highlight is retail sales reports. The markets are bracing for a slowdown in June, with retail sales expected to slow to 0.2% and core retail sales forecast to drop to 0.1%.

USD/JPY fundamental movers

The Federal Reserve was in the spotlight last week, as Jerome Powell appeared before congressional and senate committees. Powell’s message was dovish, sending the U.S .dollar down and equity markets higher. Powell said the Fed was prepared to “act as appropriate” and noted his concern over low inflation and weak global conditions. Powell’s message has raised expectations of a rate cut later in July, and this was reiterated by the Federal Reserve minutes, which were dovish. The CME Group has priced a rate cut at 77%. On the inflation front, June data was mixed. The headline reading remained unchanged at 0.1%. Core CPI improved to 0.3%, its strongest gain since January 2018.

See all the main events in the Forex Weekly Outlook

Key news updates for USD/JPY


USD/JPY Technical Analysis

111.69 was the high point of the yen rally in the first half of May. 111.15 follows.

110.40 (mentioned last week), is the next resistance line.

109.73 has held in resistance since the end of May. 109.35 is close by.

108.70 was last tested in mid-June.

108.10 remained relevant last week. This line was a swing low in late May.

107.50 is providing support. This line capped the pair in early April. 106.61 is next.

105.55 has held in support since early January.

104.65 is the final support level for now.

USD/JPY Daily Chart

USD/JPY Sentiment

I remain bearish on USD/JPY

With the markets expecting a rate cut as early as July, the U.S. dollar could face some headwinds. With tensions in the Persian Gulf still high, the safe-haven Japanese yen could gain ground.

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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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