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Dollar/yen dropped sharply last week, as the US election drama resulted in broad losses for the US dollar. The pair fell to a weekly low of 103.17, its lowest level since early February. There are no major releases out of Japan in the upcoming week. In the US, the focus will be on inflation, with the release of consumer inflation and the Producer Price Index.                                             .                                                                                

USD/JPY fundamental mover

Japan Manufacturing PMI edged up to 48.7, but still remains below the neutral-50 level, which separates contraction from expansion. Consumer releases pointed downwards. Average Cash Earnings came in at -0.9%, while Household Spending fell by 10.2%.

In the US, ISM Manufacturing PMI was stronger than expected. The index climbed from 55.4 to 59.3, above the forecast of 55.6 points. The Federal Reserve didn’t make any changes, but hinted at more easing in December. US nonfarm payrolls slowed to 638 thousand, but exceeded the estimate of 595 thousand. Wage growth remained steady at 0.1%, while the unemployment rate dropped from sharply to 6.9%, down from 7.9%. The Ivey PMI improved to 54.5, up from 54.3 points.

See all the main events in the  Forex Weekly Outlook

Key news updates for USD/JPY


USD/JPY Technical Analysis

With USD/JPY posting strong losses, we start at lower levels:

106.66 has held in resistance since the end of August.

105.52 is next.

104.11 has switched to resistance after sharp losses by USD/JPY.

103.52 is a weak resistance line.

102.13 is the first line of support.

101.51 is next.

99.98 is just below the symbolic round number of 100. It is the final support line for now.


USD/JPY Daily Chart



USD/JPY Sentiment

I am neutral on USD/JPY

The Japanese yen posted strong gains last week, but it was more of a case of the dollar’s weakness rather than strength from the dollar. The Japanese economy is limping along, and strong numbers from the US could push the dollar higher.

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