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Dollar/yen posted strong gains last week, as the U.S. dollar posted broad gains on the currency markets. The pair climbed close to 1.0% last week, marking its sharpest weekly gains since late February. Investors will be keeping a close eye on the Bank of Japan, which will issue a rate statement, followed by a press conference with BoJ Governor Kuroda.

USD/JPY fundamental movers

Japanese inflation remains well below the BoJ’s target of just below 2.0%, and last week’s inflation indicators showed little change. The bank’s preferred inflation gauge, BoJ Core CPI, ticked lower to 0.6%, down from 0.7% in the previous release. Tokyo Core CPI remained pegged at 0.9%, its lowest gain in 2019.

In the U.S., durable goods orders rebounded nicely in June. The headline reading gained 2.0%, crushing the estimate of 0.8%. Core durable goods orders jumped 1.2%, easily beating the estimate of 0.2%. The week wrapped up with Advance GDP for Q2, which dropped to 2.1%. Still, this beat the estimate of 1.8%. The markets are eyeing the Federal Reserve, with the CME Group pricing a rate cut at 78%. This would mark the first rate cut since 2008.

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 tested for the first time since mid-June.

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

107.50 has some breathing room following strong gains by USD/JPY last week. 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 am bullish on USD/JPY

The U.S. dollar flexed some muscles last week and had no trouble pushing the yen sharply lower. Investors are pleased with the strong performance of the U.S. economy. Barring any flashpoints in the Persian Gulf, the safe-haven yen is not particularly attractive, as the Japanese economy is weak and the BoJ has little to offer.

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Safe trading!