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Dollar/yen  jumped to the high  end of the range  thanks to the elections in Japan but struggled to make it over the critical line. What’s next for the pair? Rate decisions in Japan and in the US, as well as the NFP, provide an action-packed  week.

USD/JPY  fundamental  movers

Japan’s elections, US GDP and Fed speculation

Yellen will not continue at the Fed. The news sparked a rally in the dollar, as her rival candidates are more hawkish than her. Hopes for nominating Taylor sent the greenback even higher while talk about Powell cooled it down.

US GDP beat expectations by rising 3% annualized, better than expected and at the round and magic number. Durable goods orders were also robust and gave a hint.

Japanese PM Shinzo Abe defied all the doubts and won a super-majority in Japan’s lower house of parliament. Prospects of more stimulus weighed on the yen. In addition, there was no news around North Korea to weigh on the currency.

Fed and BOJ, buildup to the NFP

The Federal Reserve convenes to make its decision, and this time with less fanfare, as no press conference accompanies this one. No change is expected, but perhaps we will get a hint about December. The first Friday of the month also awaits us, with a decent buildup to the Non-Farm Payrolls. A big bounce is likely after the hurricane-skewed loss of jobs reported last time.

In Japan, the Bank of Japan makes its first post-election decision. They are likely to leave the interest rate unchanged and the policy of holding 10-year yields to 0% also unmoved. The ball seems to be in the government’s court.

See all the main events in the Forex Weekly Outlook

Key news updates for USD/JPY

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USD/JPY Technical Analysis

113.50 was a temporary line of resistance on the way up in July. 113.70 was a separator of ranges in June.

112.20 used to be important in the past. It is closely followed by 111.80, which capped the pair in May. The swing high of early September at 111.30 serves as another point of interest.

Looking down, 110.70 was a separator of ranges in June and remains important.  109.60 was a gap  line in late April, a gap that was never closed.

In June, the pair found support several times at 109.10 and this also works as support.  Further below, the cycle low of 108.10 is of high importance.

The trough of 107.35 seen in early September serves as another cushion on the way down.

USD/JPY  Daily Chart

USD/JPY Sentiment

I am neutral on USD/JPY

Dollar/yen has had its time in the sun, rising on the elections in Japan but can now fall on a more downbeat Fed.  

Our latest podcast is titled  Draghi dread and the head of the Fed

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