Search ForexCrunch

USD/JPY  lost ground last week, as the yen gained 70 points. The pair closed slightly  above the 119 level,  at 119.10. There are  six  events  this week.  Here is an outlook on the major events moving the yen and an updated technical analysis for USD/JPY.

The yen posted gains last week, taking advantage of weak US numbers, in particular  weak US retail sales. There were no major Japanese data last week.

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

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

USD_JPY_Forecast.May 18-22.

  1. Core Machinery Orders: Sunday, 23:50. This important manufacturing indicator is struggling, having posted two straight declines. The February reading came in at -0.4%, better than the forecast of -2.6%. The markets are expecting a strong turnaround in the March report, with an estimate of 1.7%.
  2. Revised Industrial Production: Monday, 4:30.  This minor indicator suffered a strong loss in February, coming in at -3.1%, which was within expectations. A small decline of 0.3% is forecast for the March report.
  3. Preliminary GDP: Tuesday, 23:50. Final GDP for Q4 showed a gain of 0.4%, within expectations. Preliminary GDP for Q1 is expected to remain unchanged, at 0.4%. An unexpected reading could have an immediate effect on the movement of USD/JPY.
  4. Flash Manufacturing PMI: Thursday, 1:35. This index dipped below the 50-point level in April for the first time in 11 months, coming in at 49.7 points. The markets are expecting the indicator to improve to 50.3 points in the May report.
  5. All Industries Activity: Thursday, 4:30. This minor indicator dipped to 0.1% in February, but this was well above the estimate of -0.9%. The markets are expecting a decline in the March report, with a forecast of -0.4%.
  6. Monetary Policy Statement: Friday, Tentative. The markets will be keeping a close eye on the BOJ’s policy statement. No major changes are expected  to the BOJ’s current monetary policy stance.

* All times are GMT

USD/JPY Technical Analysis

USD/JPY started the week at  119.80 and  touched a  high  of 120.27. The pair then reversed directions and dipped to a low of 118.85,  as support held firm at 118.68  (discussed last week). The pair closed the week at 119.10.

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

Technical lines from top to bottom:

We  start with resistance at 124.16. This line marked the start of a yen rally in June 2007, which saw USD/JPY drop to the 96 level.

122.19 is the next resistance line.

121.39 remains a strong resistance line. It has held firm since mid-March.

119.88 continues  to be  busy in May. This line was tested during the week and starts the week as an immediate resistance line.

118.68 held firm as the pair lost ground during the week. The next support line is 117.94.

116.82 has remained intact since mid-January.

115.85 is the  final support  level  for now.

I  am  bullish  on USD/JPY

Although US releases had a rough week, market sentiment remains positive about the US economy, with the Fed  expected to tighten rates later in the year. The sharp monetary divergence between the US and Japan will likely continue to weigh on the Japanese yen.

In our latest podcast, we ask: USD: Glass half full or half empty? And also discuss other topics:

Subscribe to Market Movers on iTunes

Further reading: