USD/JPY Forecast March 16-20 – Yen Slides on Soft Japanese GDP, Corona Jitters

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The U.S. dollar rebounded nicely last week, as Dollar/yen climbed 2.5% last week. This week’s highlights are the Bank of Japan rate decision, U.S. retail sales and the FOMC statement.
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USD/JPY fundamental mover

Japan’s economy contracted 1.8%, a sharper decline than the forecast of -1.7%. This marked the first decline in five quarters and points to weakness in the Japanese economy.

The coronavirus outbreak has led to a full-blown national emergency in the U.S. President Trump banned flights from Europe, which sapped risk appetite and sent investors scurrying to the U.S. dollar. Inflation levels remained low in February, with CPI coming in at 0.1% and Core CPI at 0.2%. Consumer confidence dropped sharply in February, falling from 100.9 to 95.9 points.

See all the main events in the Forex Weekly Outlook

Key news updates for USD/JPY

Updates:

USD/JPY Technical Analysis

We start with resistance at 111.69. 110.62 is next.

109.73 has switched to a resistance role after sharp gains by USD/JPY last week.

108.70 (mentioned last week) was breached at the end of the week.

108.10 is an immediate resistance line.

107.30 is providing support.

106.61 is next.

105.55 has some breathing room following strong gains by USD/JPY last week.

104.65 is the final support line for now.

USD/JPY Daily Chart

USD/JPY Sentiment

I am bearish on USD/JPY

The Japanese yen is a safe-haven asset, but investors were seeing all green last week, as the U.S. dollar enjoyed broad gains, including versus the yen. As well, the Japanese economy is dependent on trade with China, so the economic upheaval in China is weighing heavily on the Japanese economy.

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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.