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USD/JPY  had an uneventful week, as the pair posted slight losses,  closing at 122.54.  The upcoming week is a quiet one, with  just five events on the calendar. Here is an outlook on the major events moving the yen and an updated technical analysis for USD/JPY.

In the US, the news was mixed as inflation slipped, while employment and manufacturing numbers beat expectations. The  Federal Reserve statement was clearly dovish, which limited the greenback’s gains. In Japan, there were no surprises from the BOJ Monetary Policy statement.

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

USD_JPY_Forecast.Jun22-26

  1. BOJ Monthly Report: Monday, 5:00.  This report contains statistical data and analysis of current and future economic conditions. It is a minor event which is unlikely to affect the direction of USD/JPY.
  2. Flash Manufacturing PMI:  Tuesday, 1:35.  This PMI continues to hover close to the 50-point level, which separates contraction from expansion. The indicator improved to 50.9 points in May, slightly above the estimate of 50.3 points. Little change is expected  in the June report.
  3. BOJ Monetary Policy Meeting Minutes: Tuesday, 23:50. The  minutes provide a detailed account of the BOJ policy meeting earlier in June. With the BOJ continuing its radical easing monetary p0licy, the minutes are unlikely to contain any surprises which would move the markets.
  4. Household Spending: Thursday, 23:30. This important indicator measures consumer spending, a key component of economic growth. The indicator has not posted as gain in over a year, pointing to a worried Japanese consumer who has pulled the purse strings shut. The April reading came in at -1.3% better than a month earlier but well below the estimate of +3.1%. The markets are expecting a sharp turnaround in the June report, with an estimate of 3.5%. Will the indicator push into positive territory in the upcoming release?
  5. Tokyo Core CPI: Thursday, 23:30. Tokyo CPI is the primary gauge of consumer inflation, and should be treated as a market-mover. The May reading posted a weak gain of just 0.2%, matching the forecast. Little change is  expected in the June report.

* All times are GMT

USD/JPY Technical Analysis

USD/JPY  opened the week at 123.29. The pair touched a high of 124.44 and then reversed directions, dropping all the way to 1.2241, as support held firm at 1.2202 (discussed last week). The pair closed the week at 122.54.

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

Technical lines from top to bottom:

We start with 1.2774, which was an important support level back in March 2002.

1.2659 has remained intact since April 2001.

1.2589  continues to be a strong resistance line.

124.16 was tested as the pair posted gains before retracting.

123.11 has switched to a resistance line following losses by USD/JPY.

122.02 held firm  in support for a second straight week  as the pair softened late in the week. It is currently a weak line and could see action early in the week.

121.39 is the  next support level.

120.65 was an important cap in January and February.

119.65 was an important cap in April.

118.68 is the final support line for now.

I am bullish on USD/JPY

US numbers have been a mix, although Q2 numbers could still end up improving over a dismal Q1. Despite Yellen’s dovish stance, monetary divergence continues to favor the US dollar.

In our latest podcast we digest the dollar dove dive, update on Greece and preview next week’s events.

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Further reading: