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Dollar/yen  made an attempt to move higher as the leaders of both countries met, but never went too far, finding itself falling back down. What’s next? The first release of Japanese GDP coincides with the all-important US inflation report. The question remains open: bounce or break?

USD/JPY  fundamental  movers

Tax reform issues, Trump and Abe meet

Tax reform may eventually pass, but the corporate tax cut may be delayed. This was the main downer of the dollar. In addition, the Republicans suffered from a bad set of elections, undermining their stand.

The leaders of Japan and the US met in Tokyo and the meeting triggered some headlines about trade, as well as about North Korea. Dollar/yen advanced at first, but never went too far.

Apart from that, BOJ Governor Kuroda confirmed the current BOJ policy in a speech. The Fed seems ready to raise rates despite lower inflation.

US inflation, Japanese GDP

The upcoming week is certainly busier: we will get the PPI and then the CPI reports from the US. IS inflation still low? And if so, is it enough to stop the Fed from hiking? The retail sales report is also of high importance.

In Japan, the initial GDP report can confirm a seventh consecutive quarter of growth, but surprises are quite common here.

See all the main events in the Forex Weekly Outlook

Key news updates for USD/JPY

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USD/JPY Technical Analysis

115.35 is an old line that served as support when the pair traded on higher ground. 114.50 is the cycle high last seen in early July. The pair got close to that level.

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.

USD/JPY  Daily Chart

USD/JPY Sentiment

I am bearish on USD/JPY

Dollar/yen cannot rise, giving it some room to the downside. The US inflation report will probably disappoint once again. Even though it may not be enough to stop the hike in December, the dollar could feel the heat.

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