USD/JPY Forecast November 4-8 – Yen Climbs on Mixed U.S. Job Data

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The Japanese yen ended the week with strong gains, as Dollar/yen had its first losing week since the end of September. Investors will be keeping an eye on the Bank of Japan minutes and household spending.

USD/JPY fundamental movers

In Japan, last week’s data was a mixed bag. Tokyo Core CPI remained stuck at 0.5%, shy of the estimate of 0.7%. Japanese retail sales jumped 9.1%, the highest monthly gain since 2014. The strong reading was due to Japanese consumers making purchases ahead of a national sales tax which commenced in October.

In the U.S, there was positive news from the GDP report for the third quarter. The initial GDP release was stronger than expected. The economy gained 1.9%, beating the forecast of 1.6%. Employment numbers were mixed. Wage growth improved to 0.2%, up from 0.0%. However, this fell short of the forecast of 0.3%. Nonfarm payrolls slipped to 128 thousand, but this beat the forecast of 90 thousand. As well, the Federal Reserve lowered rates for a third straight month, putting pressure on the U.S. dollar.

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 111.62, which was last active in April. 110.62 is next.

109.73 has held in resistance since the end of May. 109.35 is close by.

108.70 remains relevant.

108.10 is providing weak support.

107.30 (mentioned last week) has some breathing room in support. This line switched to support in early October, at the start of the most recent dollar rally.

106.61 is next.

105.55 has held in support since late August.

104.65 was last tested in January. It is the final support line for now.

USD/JPY Daily Chart

USD/JPY Sentiment

I remain bullish on USD/JPY

The new sales tax could dampen consumer spending, which would hurt an already fragile economy. Weak global demand has taken a toll on the Japanese exports and manufacturing sectors. With risk appetite steady, the safe-haven yen will have trouble attracting investors.

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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.