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USD JPY Forecast Dec. 2-6USD/JPY  continues to rally, as the pair gained over a cent last week. The pair closed the week  at 102.42.  The upcoming week has seven events. Here is an outlook on the major market-movers and an updated technical analysis for USD/JPY.

US employment numbers were strong last week, helping boost the US   dollar. Japanese inflation indicators looked good, but manufacturing production was well below the estimate.

 

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

USD/JPY daily chart with support and resistance lines on it. Click to enlarge:

 

  1. Capital Spending: Sunday, 23:50.  Capital Spending  measures the total value of new business capital  expenditures. It is released on a  quarterly basis,  magnifying its  impact. After two straight declines, the indicator posted a flat reading of 0.0% in Q2. The upward trend is expected to continue in Q3, with an estimate of a strong gain of 3.1%.
  2. BOJ Governor Haruhiko Kuroda Speaks: Monday, 2:30. Kuroda will deliver remarks in Nagoya. Analysts will be listening closely, looking for hints as to changes   in the BOJ’s monetary policy.
  3. Monetary Base: Monday, 23:50. The Bank of Japan   continues to increase its monetary base  through the purchase of long-term bonds. The indicator posted a gain of 45.8% in October and a gain of 47.2% is expected for the November release.
  4. Average Cash Earnings: Tuesday, 1:30. This is an important economic indicator, since an increase in employment income should lead to stronger consumer spending and economic growth. The indicator posted a weak gain of 0.1% in October, but this was well above the estimate of -0.5%. The markets will be looking for a stronger gain for the November release.
  5. 10-year Bond Auction: Thursday, 3:45. The average yield on 10-year bonds continues to decrease, with the October yield coming in at 0.61%. As a minor event, this release is unlikely to have a major impact on the movement of USD/JPY.
  6. Leading Indicators: Friday, 5:00. This composite index is based on 11 economic indicators, but is a minor event since most of the data has been released previously. The index rose to 109.5% last month, and little change is expected in the upcoming release.
  7. BOJ Governor Haruhiko Kuroda Speaks: Saturday, 2:00. Kuroda will deliver remarks in Tokyo. A speech which is considered more hawkish than expected is bullish for the Japanese yen.

*All times are GMT.

USD/JPY Technical Analysis

USD/JPY started the week at 101.26. The pair dropped to  101.14  and then reversed directions,  climbing  past the 102 line and touching a  high of 102.61. USD/JPY closed the week at 102.42, as resistance at 102.50 (discussed last week) remained intact.
Live chart of USD/JPY: [do action=”tradingviews” pair=”USDJPY” interval=”60″/]
Technical lines from top to bottom

We begin with resistance at 106.66 which has held firm since Nov. 2008. At that time, USD/JPY was in a downward spiral which saw it drop below the 0.90 line. This is followed by resistance at 105.70.

This is followed by resistance at the round number of 104. This was a key line back in May 2008. At that time, USD/JPY was in the midst of a rally which saw the pair climb as high as 110.

102.50 was an important resistance line in late May and had held firm until last week. This line begins the week as weak resistance.

101.44 was the post-crisis high seen in April 2009, and has  reverted to  a support role for the first time since July.

100.85 saw activity in July as the dollar showed strength against the yen. It has some breathing room as the pair trades at higher levels.

100, a key level, has strengthened in support as USD/JPY trades at higher levels. 98.80 is the next support level.

97.80 continues to provide strong support. 96.59 has held firm since the first week in October. It marks the low point of a downward trend by the pair which started in late September.

The round number of 95 is a psychologically significant line. It has held firm since mid-June.

 

I am bullish on USD/JPY

The dollar continues to beat up on the struggling yen, and is trading above the 102 line. With increasing talk of the Fed tapering QE, we could see the surging dollar continue to push to higher ground.