USD/JPY saw a very exciting week with the intervention finally happening and sweeping the markets. The upcoming week is light in terms of events, so the technicals will play a bigger role. Here’s an outlook for Japanese events and an updated technical analysis for USD/JPY.
USD/JPY daily chart with support and resistance lines on it. Click to enlarge:
Note that Monday and Thursday are official holidays in Japan. The yen will still move. Let’s start:
- All Industries Activity: Wednesday, 3:30. This indicator shows the change in purchases made by businesses. A subset of this data was already reflected a week earlier. Nevertheless, as the only indicator this week, it will probably move the yen. A rise of 1.1% is expected now.
USD/JPY Technical Analysis
Dollar/yen began the week following the downtrend channel, going below the 83.34 level (mentioned in last week’s outlook) and reaching a new 15 year low of 82.87. And then the BOJ came in – the massive intervention sent USD/JPY 300 pips higher, breaking the downtrend channel and quite a few resistance lines. It remained in a narrow range until the end of the week, closing at 85.79.
USD/JPY is now in a narrow range that characterized its trading after the intervention – 85.60, which the BOJ may be guarding and the small double top of 85.90.
Looking up, the next line of resistance is 86.34, which provide support twice in July and worked as resistance in August. The next line is close – 86.90, which was a support line in June.
Above, 88.10 was a peak in July, before the strong fall and now served as resistance. Higher, 89.15 was a double top almost three months ago, and it’s followed by 89.76, that provided support a long time ago.
Looking down below the guarded 85.60 line, the next line of support is at 84.80, which provided support in August. This is followed by the 83.34 line and the new 15 year low at 82.87.
I remain bullish on USD/JPY.
The intervention was massive and I believe that the BOJ will continue working hard to keep the currency weak, also during the Japanese holidays and might send the pair out of the narrow range – to the upside.
Further reading:
- 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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