USD/JPY Forecast October 28-Nov. 1 – Yen Continues to Drift

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Dollar/yen showed little movement for a second straight week. It’s a busy week in Japan, with inflation and retail sales reports, as well as the Bank of Japan rate decision.

USD/JPY fundamental movers

In Japan, inflation levels remain weak. The BoJ Core CPI, the bank’s preferred inflation gauge, dipped to 0.3% in August. This was the lowest level in over two years. Inflation is expected to remain well below the BoJ’s target of just below 2.0%. Manufacturing PMI dropped to 48.5 in October, pointing to contraction. This was its lowest level since 2016. The manufacturing sector has been hurt by weak global demand, the U.S-China trade war and a new sales tax.

Over in the U.S, manufacturing data was in focus last week, and the numbers were soft. Core durable goods orders fell by 0.3%, the second decline in three months. The headline reading declined by 1.1%, its first decline in four months. The manufacturing PMI improved to 51.5, above the estimate of 50.7. This points to minimal expansion.

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 and is under strong pressure in resistance.

108.10 is providing 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 Japanese economy remains weak, and risk appetite remains fairly strong. This means that the safe-haven yen is not particularly attractive to 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.