The Japanese calendar is quite light this week. So, the yen will mostly move on technicals and words from senior officials regarding interventions. Here’s an outlook for the Japanese events and an updated technical analysis for USD/JPY.
USD/JPY daily chart with support and resistance lines marked. Click to enlarge:
USD/JPY reached new lows in the past week, despite the various “verbal interventions” by Japanese officials. It’s now close to the trough reached in the mid 90s. Let’s start:
- Tertiary Industry Activity: Sunday, 23:50. This important indicator of the services sector always moves the yen. Last moth saw a surprising jump of 1.6%in the value purchased by businesses. A smaller rise is expected now.
- All Industries Activity: Thursday, 4:30. This figure completes the previous one, covering both services and goods. After a few months of stability, the index rose by 1% last time. A similar rise is expected now.
* All times are GMT
USD/JPY Technical Analysis
At the beginning of the week, USD/JPY traded between 82.36 and 81.65, but then dropped lower and reached 80.89 twice. This double bottom is a new line (didn’t appear last week).
Looking up, 81.65 provided support in the past two weeks, and is now the immediate resistance line. Above, 82.36 is a minor line of resistance after working as such in the past week. 82.87 is the bottom line where the BOJ made its big intervention from.
Higher, 84.11, that that served as support in the in recent months, is the next line of resistance. It’s followed by 84.72, which is a minor support line after working as such in February.
Higher, 85.90 line is the peak that USD/JPY reached after the intervention and is a strong resistance line. 86.35 was a support line in July and later switched to resistance. It’s closely followed by 86.88, that worked as support earlier. The last line for now is 88.10, which was a support line in March and later worked as resistance.
Looking down, the fresh 15 year low of 80.90 is a strong support line after working as a double-bottom. Below, 80.43 was a low point back in the 90s. A drop below this line will send us to uncharted areas. The round number of 80 is the next support line.
I turn bullish on USD/JPY.
The US dollar’s weakness may have reached a bottom, or at least stabilizing. With Japanese interest rates at 0%, and with the legitimacy that Japan has to intervene (forex war is on), we could see a bounce this week.
- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For EUR/USD, check out the Euro/Dollar forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Australian dollar (Aussie), check out the AUD to USD forecast.
- For the New Zealand dollar (kiwi), read the NZD forecast.
- For USD/CAD (loonie), check out the Canadian dollar forecast.
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