A rate decision is the highlight of a busy week in Japan. Here’s an outlook for Japanese events, and an updated technical analysis for USD/JPY. Will we see another intervention?
USD/JPY daily chart with support and resistance lines marked. Click to enlarge:
It took some time, but the results of the big intervention in the yen have been eroded. Will the BOJ move again, or hope for some dollar strength? Let’s start:
- Monetary Base: Sunday, 23:50. This indicator shows the change of money in circulation. The BOJ wants to see more money in circulation in order to stimulate the economy. After a growth rate of 5.4% last month, 5.8% is expected now.
- Average Cash Earnings: Monday, 12:30. This figure combines employment and inflation. The past two months saw significant growth rates in the money received by workers – 1.8% and 1.4%, pushing the yen higher. Another rise is expected now – 0.8%.
- Rate decision: Tuesday morning. The BOJ returns to another scheduled meeting. There’s no chance of a hike in the rate, at 0.10%. The central bank will discuss the results of the intervention, currently unsuccessful, and may hint about further interventions. The wording at the press conference usually rocks the currency more than the decision itself.
- BOJ Monthly Report: Wednesday, 5:00. This statistical report will be interesting to watch as it summarizes September, the month of the big intervention. Future expectations also rock the currency.
- Leading Indicators: Thursday, 5:00. The composite index consists of 12 economic indicators, most of them already released earlier. Nevertheless, it has some impact on the yen. Another rise in the indicator is expected now, after reaching 100.
- Monetary Policy Meeting Minutes: Thursday, 23:50. Two protocols will be released this time, one for the scheduled meeting and one for the emergency meeting before the intervention. It will be interesting to see what the central bank thought about the results of the move.
- Economy Watchers Sentiment: Friday, 5:00. 2000 workers are surveyed for this PMI-like figure that has been under 50 for quite some time. Another dip is expected now – from 45.1 to 44.8 – deep pessimism.
All times are GMT.
USD/JPY Technical Analysis
After being supported above 84.11, dollar/yen fell and didn’t look back. It found new support at 83.15 twice during the week, before closing at 83.21.
83.15 provides strong support for the yen after the past week’s support. This area also worked as support just before the intervention.
The next line of support is 82.87, the year-to-date low (also a 15 year low). Even lower, 80.43 was the lowest point back in the 90s. The BOJ is likely to intervene long before the pair reaches this low.
Looking up, 84.11, which provided support in the past week and also beforehand, is now a strong 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 serves as the next resistance line.
86.35 was a support line in July and later became a resistance line. 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.
I am bullish on USD/JPY.
The pair is near the levels of the previous intervention. Apart from a new move by the BOJ, the dollar could retrace its heavy losses in recent weeks.
- 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/USD forecast.
- For the New Zealand dollar (kiwi), read the NZD/USD forecast.
- For USD/CAD (loonie), check out the Canadian dollar forecast.
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