USD/JPY Forecast July 6-10 – Yen Continues to Yawn

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For a third straight week, Dollar/yen showed little movement. On the fundamental front, Japan releases Household Spending, an important gauge of consumer spending. In the U.S., this week’s highlights are the ISM Non-Manufacturing PMI and the Producer Price Index.

USD/JPY fundamental mover

Japanese numbers were soft, reflective of weak conditions across the economy. Retail sales slipped 12.3%, following a decline of 13.7% beforehand. Industrial Production fell by 8.4%, marking a third straight decline. Both Tankan indices were in negative territory in Q2. The manufacturing index plunged to -34, down from -8 in the previous release. The services index dropped to -17, down from +8 in Q1.

 In the U.S., manufacturing improved sharply, as Manufacturing PMI climbed from 39.8 to 49.6 points. The estimate stood at 50.0, which separates contraction from expansion. Durable goods orders sparkled in May. The headline figure climbed 4.0%, rebounding after a decline of 7.4 percent. The core reading surged 15.8%, rebounding from a read of -17.2% beforehand. The Conference Board consumer confidence index jumped from 85.9 to 98.1 and easily beat the estimate of 91.6 points. Nonfarm payrolls shot up in June, with a gain of 4.80 million. This comes after a May release of 2.509 million. Unemployment claims dropped from 1.48 million to 1.42 million, higher than the estimate of 1.35 million.

See all the main events in the Forex Weekly Outlook

Key news updates for USD/JPY

Updates:

USD/JPY Technical Analysis

110.63 has been a resistance line since late March.

109.73 is protecting the 110 level, which has psychological significance.

108.70 (mentioned last week) is next.

108.10 switched to resistance in early June, when USD/JPY fell sharply.

107.30 remains an immediate resistance line.

106.61 is the first line of support.

105.55 has held in support since mid-March.

104.65 follows.

The round number of 104 is the final support level for now.

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USD/JPY Daily Chart

USD/JPY Sentiment

I am neutral on USD/JPY

Despite the economic turmoil across the globe, the Japanese yen has not lived up to its safe-haven reputation. Surprisingly, risk currencies such as the Australian dollar have rallied. The US dollar has also hit a rough patch, as the human and economic toll that Corvid-19 has taken in the US has dampened enthusiasm for the greenback. Both currencies appear to be holding a “losing hand”.

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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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