USD/JPY Forecast June 10-14 – Yen breaks below 108 for first time since January

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The Japanese yen paused from its recent rally, as Dollar/yen posted small losses last week. The pair fell 2.8% in May, its sharpest monthly drop in 2019. The yen briefly broke below the 108 line this week, for the first time since early January.

USD/JPY fundamental movers

Trade tensions remain high, which has been positive news for the safe-haven yen. The trade war between the U.S. and China wasn’t in the headlines last week, but with no talks scheduled between the sides, there is no end in sight to the crisis between the world’s two super-economies. As well, the U.S. had threatened sanctions against Mexico, accusing it of not doing enough to combat illegal immigration. The tariffs have been suspended for now, but an unpredictable Trump could reimpose the tariffs if the immigration crisis worsens.
Since raising the benchmark rate in December, the Federal Reserve has said that the next rate move could be in either direction. The markets have been much more dovish, pricing in a rate cut late in the year. This position was bolstered last week, after comments from Fed chair Jerome Powell and FOMC member James Bullard. Powell said that the Fed would “act as appropriate to sustain the expansion”, and analysts noted that he did not mention his “patient” approach to monetary policy, which has been a buzzword in Powell’s recent comments. Powell’s remarks echoed comments from Bullard, who stated that the Fed might have to lower rates shortly due to low inflation and the ongoing trade war with China. Bullard added that the current benchmark rate, which is at a range of 2.25% to 2.50%, is too high for current economic conditions, and recommended lowering rates in order to stabilize the economy.

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Key news updates for USD/JPY

Updates:

USD/JPY Technical Analysis

112.73 was an important resistance line in October.

112.25 has held in resistance since December.

111.69 was the high point of the current slide which started in early May. 111.15 follows.

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

109.73 remained relevant during the week.

109.35 is the next resistance line.

The pair broke through 108.70 late in the week.

108.10 was a swing low in late May.

107.50 capped the pair in early April.

106.61 is next.

105.55 is the final support level for now.

USD/JPY Daily Chart

https://www.tradingview.com/x/6X7HpBwh/

USD/JPY Sentiment

I remain neutral on USD/JPY

With no trade negotiations scheduled between the U.S. and China, the trade war may stay in a holding pattern. Risk appetite remains fragile, and the yen remains an attractive asset for nervous investors. The U.S. economy is performing well, but the Fed message of a possible rate cut could weigh on the greenback.

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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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