The yen sparkled this week, as USD/JPY dropped 170 points last week. The pair closed the week at 108.55, as the yen climbed to 5-month highs. There are just four releases this week. Here is an outlook for the highlights of this week and an updated technical analysis for USD/JPY.
The yen took advantage of soft US consumer numbers, as CPI and retail sales reports missed their estimates. As well flash-points in North Korea and Syria spooked investors, who snapped up the safe-haven Japanese yen.Updates:
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USD/JPY graph with support and resistance lines on it. Click to enlarge:
- BOJ Governor Haruhiko Kuroda Speech: Monday, 6:15. Kuroda will speak at an event in Tokyo. A speech which is more hawkish than expected could boost the Japanese yen.
- Trade Balance: Wednesday, 23:50.Japan’s trade surplus jumped to JPY 0.68 trillion in February, beating the estimate of JPY 0.55 trillion. Another strong surplus is expected, with an estimate of JPY 0.61 trillion.
- Flash Manufacturing PMI: Friday, 00:30. The PMI continues to point to slight expansion in the manufacturing sector. The indicator came in at 52.6 in March, short of the forecast of 53.5 points. Little change is expected in the April release.
- Tertiary Industry Activity: Friday, 4:30. The indicator improved to 0.0% in January, but missed the estimate of 0.2%. The markets are expecting better news in February, with a forecast of 0.3%.
USD/JPY opened the week at 111.21. The pair quickly climbed to a high of 111.58, and then headed lower, dropping to a low of 108.35, breaking below support at 109.18 (discussed last week). The pair closed the week at 108.55.
Technical lines from top to bottom:
112.53 has held in resistance since mid-March.
110.83 is next.
109.18 marked the start of a rally in September 2008 which saw USD/JPY drop close to the 0.87 level.
107.49 was a cap in July 2016.
105.55 was a cushion in May and June.
104.25 is the final support line for now.
I am neutral on USD/JPY
The US economy remains strong, and the markets are expecting a rate hike in June. However, if geopolitical concerns persist, safe-haven assets such as the yen could continue to gain ground.
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- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For EUR/USD, check out the Euro to Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Canadian dollar (loonie), check out the Canadian dollar forecast.
- For the kiwi, see the NZD/USD forecast.