USD/JPY Outlook – September 27 October 1

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After a week of holidays, the Japanese calendar is full again. Here’s an outlook for the Japanese events, and an updated technical analysis for USD/JPY.

USD/JPY  daily graph with support and resistance lines marked. Click to enlarge:

usd jpy forecast September October

Echoes of the big intervention in the yen are still felt, with mini follow up interventions, or rumors of such. This will probably continue this week, but also the indicators will have an effect.

  1. Trade Balance:  Sunday, 23:50. Japan’s export oriented economy usually has a surplus. This surplus unexpectedly jumped from 500 billion to 600 trillion yen, and is now expected to drop back down. This release will provide a strong start for the yen.
  2. Masaaki Shirakawa talks: Monday, 5:30. The head of the BOJ is the limelight after the big intervention to weaken the yen and its aftermath. In a conference in Osaka, he’ll have a chance to relate the currency, and move it.
  3. Tankan Manufacturing Index: Tuesday, 23:50. This is one of the country’s most important indicators. The official BOJ survey asks 1200 manufacturers about the current economic current conditions in the current quarter. In Q2, the index surprised by finally rising above 0. The score of 1 point means small optimism about improving conditions. It’s now expected to rise to 7 points, weighing on USD/JPY.
  4. Industrial Production: Wednesday, 23:50. The preliminary release of industrial output is expected to show a 1.2% rise after weak results last month. The actual result tends to fall short of expectations, so the yen might weaken on this release.
  5. Retail Sales: Wednesday, 23:50. The rate of growth in retail sales has been rather healthy in recent months, usually exceeding expectations. Last month’s 3.9% rise was a surprise, and it’s expected to be followed by a stronger figure now – 4.6%. It’s slightly overshadowed by the industrial production release.
  6. Tokyo Core CPI: Thursday, 1:30. Inflation for the capital tends to be the most accurate and most influential inflation figure, with a stronger impact than the national number. Japan’s deflation is getting better, with the annual drop in prices becoming lower – from 2% gradually to 1.1%. An annual drop of 1% in prices is expected now.
  7. Unemployment Rate: Thursday, 1:30. Despite being a late figure, the unemployment rate is quoted by many, and moves the yen. The unemployment rate in July is expected to be better than in June – 5.1% instead of 5.2%.
  8. Household Spending: Thursday, 1:30. This important consumer indicator is recovering, with two straight months of growth. The strong 1.1% growth last month is likely to be followed by a 1.4% rise this time.

Let’s review the events. All times are GMT.

USD/JPY Technical Analysis

USD/JPY gradually dropped at the beginning of the week until another intervention sent it back up towards 85.50. This didn’t help, as it closed lower – 84.22.

The pair is now bound between, the past week’s low of 84.11 (a new line that didn’t appear on last week’s outlook) and 84.88, which was a support line in August.

Higher, 85.50 capped the pair now and worked as support beforehand. It’s still of importance. Just above this line, the 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, which provided support earlier. The last line for now is 88.10, which was a support line in March and later worked as resistance.

Looking down below 84.11, the next support line is 83.34, which supported the pair before the intervention. It’s followed by 82.87, the year-to-date low (also a 15 year low).

I remain bullish on USD/JPY.

It seems that the BOJ will continue intervening in the markets, and will cushion any drop in USD/JPY. Now that the holidays are over, the BOJ can act more aggressively.

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About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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