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Japanese inflation remains at very low levels. BoJ Core CPI, the Bank of Japan’s preferred inflation gauge, dipped to 0.2% in February, down from 0.3% a month earlier.
In the U.S., the Fed slashed rates at the start of the week, from 1.25% to 0.25 percent. This emergency cut was in response to the meltdown in the financial markets. Later in the week, the Fed announced it was establishing a Commercial Paper Funding Facility, in order to keep credit flowing to the economy. On the manufacturing front, the Empire State Manufacturing Index plunged by -21.5 points, compared to the forecast of +5.1 points. Core retail sales fell by 0.4%, while retail sales declined by -0.5%.
Updates:
With USD/JPY posting sharp gains, we start at higher levels:
113.40 was the peak in October 2018.
112.73 has held in resistance since December 2018. This is followed by 112.25.
111.69 was tested in mid-February.
110.62 is an immediate support level.
109.73 has switched back to a support role after sharp losses by USD/JPY last week.
108.70 (mentioned last week) is next.
108.10 remains relevant.
107.30 is the final support line for now.
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USD/JPY Sentiment
I am bullish on USD/JPY
The Japanese yen is a safe-haven asset, but investors continue to snap up U.S. dollars, which has enjoyed broad gains. China is a close trading partner of Japan, and the COVID-19 outbreak has taken a heavy toll on the Japanese economy.
Safe trading!
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