USD/JPY Forecast June 24-28 – Will Middle East sparks boost the yen?

Dollar/yen had its worst week since mid-March, falling 1.1%. The pair dropped close to the 107 line, as the yen took advantage as the U.S. dollar was broadly lower. investors will be keeping a close eye on the BoJ, which will set interest rates and release a rate statement.

USD/JPY fundamental movers

Investors are nervous after tensions in the Persian Gulf escalated after Iran shot down a U.S. drone last week. President Trump ordered an airstrike against Iranian targets, but the mission was aborted close to the last minute. There is fear that a wrong move by the U.S. or Iran could trigger a war in the Middle East. The grim situation helped bolstered the safe-haven yen.

In the U.S., the spotlight was on the Federal Reserve, which held its monthly policy meeting. FOMC members made no changes to rate levels, but hinted at a rate cut in 2020. Will the Fed wait that long before pressing the rate trigger? It’s noteworthy that eight FOMC members favor a rate cut in 2019. The markets are prepared for a move later this year, with the CME Group pricing in a rate cut in September at 62%.         

See all the main events in the Forex Weekly Outlook

Key news updates for USD/JPY


USD/JPY Technical Analysis

With the yen posting sharp gains last week, we start at lower levels.

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 the next resistance line.

108.70 has some breathing room after sharp losses by USD/JPY 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 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 bearish on USD/JPY

The yen posted sharp gains last week, and tensions in the Persian Gulf could boost the safe-haven currency, as investors nervously eye breaking developments. The Fed has all but advertised a rate cut, which the markets are predicting will occur later this year. This could dampen enthusiasm for the U.S. dollar.

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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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