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/JPYUpdates:
- Nov 17, 10:56: USD/JPY could not go up – 4 reasons why it is falling: The US dollar is retreating and more so against the Japanese yen. This is an extension of the falls seen...
- Nov 16, 14:54: GBP: Where To Position Ahead Of The Important EU Summit On Dec 14-15 – Nomura: The pound is not going anywhere fast amid OK economic data and Brexit worries. What’s next for the pound? The...
- Nov 16, 14:30: US jobless claims, Philly Fed, import prices all disappoint – USD ticks down: US weekly jobless claims are up to 249K, disappointing expectations. Import prices are only up by 0.2%, also short of...
- Nov 15, 14:30: US core CPI rises to 1.8%, retail sales mixed – USD wobbles: Mixed data from the US: core CPI is up to 1.8% y/y, better than expected. On the other hand, the...
- Nov 15, 8:37: Japanese GDP grows slowly – JPY actually rises: The Japanese economy grew by 0.3% in the third quarter of 2017, lower than 0.4% that was expected. It is...
- Nov 14, 11:10: Yellen, Draghi, Carney and Kuroda live blog – as it happened: ECB President Mario Draghi hosted a panel with his top-tier peers: Fed Chair Janet Yellen, BOJ governor Haruhiko Kuroda, and...
- Nov 13, 15:08: Yield curve blues and sparks in oil – MM #164: The yield curve is flattening and this serves as a warning sign of an upcoming recession. Are the worries justified?...
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
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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