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Dollar/yen posted considerable gains for a second straight week. The pair pushed into 107-territory for the first time since early August. Will the dollar rally continue this week? The highlights for the upcoming week are U.S. consumer inflation and retail sales reports, while Japanese revised GDP for Q2 will also be of interest.  

USD/JPY fundamental movers

In the U.S., weak activity in the manufacturing sector is raising concerns. ISM manufacturing PMI slipped to 41.9 in August, down from 51.2 in July. It marked the first reading in contraction territory (below the 50-level) since August 2016. Unemployment data was a mix. Nonfarm payrolls slowed to 130 thousand in August, down from 164 thousand a month earlier. However, wage growth rose to 0.4% in August, its strongest gain of the year. The unemployment rate remained unchanged at 3.7%. In Japan, household spending slowed to 0.8% in July, down from 2.8% a month earlier.

See all the main events in the  Forex Weekly Outlook

Key news updates for USD/JPY


USD/JPY Technical Analysis

We start with 109.73, which has held in resistance since the end of May. 109.35 is close by.

108.70 follows.

108.10 was a swing low in late May.

107.30 has held in resistance since the first week in August.

106.61(mentioned  last week) remains relevant. It is providing immediate support.

105.55  is next.

104.65 has held firm since the first week of January.

The round number of 104 was a key line in May 2008.

103.53 was an important resistance line in August 2016. It is the final support line for now.

USD/JPY Daily Chart

USD/JPY Sentiment

I am neutral on USD/JPY

Investor risk appetite has solidified of late, which has hurt the safe-haven yen. Will the yen’s downward trend continue? The trade war between the U.S. and China remains full-blown, but the sides are scheduled to hold talks next month, and if there are signs that trade tensions are easing, the yen could lose ground.

Further reading:

Safe trading!