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The yen weakened last week, as USD/JPY gained about 100 points. USD/JPY closed the week at 98.61. The upcoming week is  a quiet one, with  just five  events.  Here is an outlook on the major market-movers and an updated technical analysis for USD/JPY.

The US started out the week with some disappointing releases, but recovered as Unemployment Claims was solid and manufacturing data beat expectations, and the US dollar moved higher.

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

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

USD JPY Outlook Nov 4-8

  1. Monetary Base: Monday, 23:50. Monetary Base continues to post gains, as the BOJ continues its aggressive stimulus program. The indicator was up 46.1% last month, higher than the estimate of 45.3%. The forecast for the October release stands at 48.3%.
  2. BOJ Governor Haruhiko Kuroda: Tuesday, 5:30. Kuroda will speak at an event in Osaka. Analysts will be keeping close tabs for any hints regarding the Bank’s future monetary policy.
  3. Monetary Policy Meeting Minutes: Tuesday, 23:50. The BOJ made no change to interest rate or QE levels at its policy meeting last week, and the minutes provides details about the factors that led to the decisions as well and provides the views of the policymakers who participated in the meeting.
  4. 10-year Bond Auction: Wednesday, 3:45. The yield on 10-year bonds has  been slowly falling, and the average yield at the previous auction came in at 0.68%. The markets are not expecting a significant change at the upcoming auction.
  5. Leading Indicators: Thursday, 5:00. This index is based on 11 economic indicators, but is considered a minor release since most of the data has been released previously. The index dropped slightly in September, coming in at 106.5%. The markets are expecting an improvement for October, with an estimate of 109.4%.

*All times are GMT.

USD/JPY Technical Analysis

USD/JPY started the week at 97.60. The pair dropped to a low of 97.44, as then reversed directions, climbing to a high of 98.85, as resistance at  98.90 (discussed last week) held firm. USD/JPY closed the week at 98.61.
Live chart of USD/JPY: [do action=”tradingviews” pair=”USDJPY” interval=”60″/]
Technical lines from top to bottom

We  start with 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 but has not been tested since that time.

101.44 was the post-crisis high seen in April 2009, and has not been tested since mid-July. 100.85 saw activity in July as the dollar showed strength against the yen.

100, a key level, saw some activity in September and continues to provide resistance.

98.90 held firm as USD/JPY posted strong gains during the week. It begins the week as a weak resistance line and could see action early in the week.

97.80 has reverted to a support role after the pair pushed higher.

96.59 has some breathing room, as the pair trades at higher levels. It has held firm since mid-August.

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

93.79 is our final support line. It marked the low point of a rally by USD/JPY which started in mid-June and saw the pair climb to the mid-101 range in July.

I am  bullish on USD/JPY

The yen was unable to take advantage of weak US releases early in the week, and the dollar could continue to pressure the yen and push into 99 territory. With the Fed unlikely to take any action on QE before next year, key economic events this week will be a crucial determining factor as to the movement of USD/JPY.