Search ForexCrunch

The US dollar looked sharp last week, as USD/JPY rose about 140 points, closing at 123.93.  The upcoming week is very quiet, with  just 3  events. Here is an outlook on the major events moving the yen and an updated technical analysis for USD/JPY.

In the US, retail sales badly disappointed  and consumer sentiment fell short, but  the yen failed to capitalized and softened against the dollar. There were no important numbers out of Japan last week.

[do action=”autoupdate” tag=”USDJPYUpdate”/]

USD/JPY graph with support and resistance lines on it:

USD_JPY_Forecast.July20-24

  1. All Industries Activities: Wednesday, 4:30.   The indicator has struggled, with only one gain above 0.1% in all of 2015. The April release came in at 0.1%, within expectations. The markets are bracing for a downturn in the May report, with an estimate of -0.5%.
  2. Trade Balance:  Wednesday, 23:50. Trade Balance is closely linked to currency demand, as foreigners must buy Japanese yen in order to purchase Japanese exports. The May trade deficit came in at 0.18 trillion yen, almost matching expectations. The markets are expecting the deficit to increase to 0.25 trillion yen in the June report.
  3. Flash Manufacturing PMI: Friday, 1:35. This PMI has hovered very close to the 50-point level during 2015. The June reading came in at 49.9 points, short of the estimate of 50.6 points. The forecast for the July report stands at 50.5 points.

* All times are GMT

USD/JPY Technical Analysis

USD/JPY  opened the week at 122.50 and quickly  dropped to a low  of  122.40. The  pair then bounced back,  climbing  to a high of 1.2423,  as it tested  resistance  at 1.2416 (discussed last week). USD/JPY closed the week at 1.2393.

Live chart of USD/JPY: [do action=”tradingviews” pair=”USDJPY” interval=”60″/]

Technical lines from top to bottom:

We  begin  with resistance at  1.2878. This marked the start of a yen rally in May 2002, which saw USD/JPY fall below the 116 line.

1.2774 is the next line of resistance.

1.2659 has remained intact since May 2002.

1.2586  continues to be a strong resistance line.

124.16 was an important cap in late June. This line was tested during the week as the greenback made strong gains.

123.18 continues to be busy, and has switched to a support role.

122.01 is the next support level.

121.39 was breached in early July as the dollar started its current rally.

120.65  is  protecting the  symbolic 120 level.

119.65 was  a key support  line in April.

118.68 is the final support line for now.

I am bullish on USD/JPY

While recent US data has not impressed, such  as the fall in retail sales, Yellen’s relatively upbeat comments  helped USD/JPY push higher last week. With little data coming out of Japan this week, key US numbers will have a magnified impact on the fortunes of the pair this week.

In our latest podcast, we drill down the deals, the aGreekment and Iran and the market impact.

Follow us on Stitcher.

Further reading: