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The U.S. dollar continues to post strong gains, and  Dollar/yen climbed above 2.5% for a second straight week. This week’s highlights include Japanese inflation and U.S. manufacturing PMI and unemployment claims.

USD/JPY fundamental mover

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%.

See all the main events in the  Forex Weekly Outlook

Key news updates for USD/JPY


USD/JPY Technical Analysis

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.


USD/JPY Daily Chart


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!