Dollar/yen tumbled down alongside global stock markets and as US data fell short of expectations. What’s next? The upcoming week features US retail sales, the FOMC meeting minutes and eyes wide open to developments in equity markets.
USD/JPY fundamental movers
Stock correction or change of course?
The Japanese yen returned to its role as a safe-haven currency. The sell-off in stocks sent money flowing into the yen. The correction seen late in the week helped the pair recover as well.
US data did not help the greenback: Core CPI got stuck at 2.2% and did not recover. The University of Michigan’s consumer confidence measure also fell below 100 points. US President Donald Trump complained about the Fed’s policy.
Getting busier
The third week of October kicks off with top-tier figures from the US: retail sales. The data feeds into Q3 GDP. Later on, the FOMC Meeting Minutes will be of interest, especially comments about Trump’s trade tariffs.
Bank of Japan Governor Haruhiko Kuroda will make two public appearances. However, the yen will move more with stocks and bonds than anything else.
See all the main events in the Forex Weekly Outlook
Key news updates for USD/JPY
[do action=”autoupdate” tag=”USDJPYUpdate”/]USD/JPY Technical Analysis
115.55 was a high point in the first half of 2017 and is an upside target. 114.60 was the high point in early October and serves as resistance.
114 is a round number and was a stepping stone on the way down. 113.50 supported USD/JPY when it traded on high ground.
113.15 was a swing high back in July. 112.55 served as support in September and resistance in October, making it a significant level.
111.80 was the low point after the fall in mid-October. 111.50 capped the pair in August.
110.60 was a swing low in late July and then again in late August. 109.70 was a swing low in late August and provides extra support below the round 110 level.
Close by, 109.35 was a cushion in mid-July. 108.70 was a cushion early in the summer and 108.10 a swing low in late May.
Lower, we find 107.50 capped the pair in early April and is a strong line.
USD/JPY Daily Chart
USD/JPY Sentiment
I am bearish on USD/JPY
The relief in stock markets looks temporary. The Japanese yen may continue riding higher with fears. In addition, unimpressive US data could weigh on the greenback against the Japanese currency.
Our latest podcast is titled Too hot or too cold? The world is watching the Fed
Further reading:
- EUR/USD forecast – for everything related to the euro.
- GBP/USD forecast – Pound/dollar projections
- AUD/USD forecast – analysis for the Aussie dollar.
- USD/CAD forecast – Canadian dollar predictions
Safe trading!
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