Sunday, September 16, 2018 12:57 PM EDT
USDJPY Analysis and Talking Points:
- Easing Trade Tensions and Widening Spreads Bearish JPY
- BoJ Rate Decision and CPI in Focus
Fundamental Forecast for JPY: Bearish
The Japanese Yen had been notably weak against the USD with losses of over 1%. While the economic calendar had been somewhat quiet from the Japanese point of view mid-week source reports that the US is looking to reach out to China for another round of trade talks had led to an easing of trade war fears, consequently weighing on the Japanese Yen. Alongside this, US and Japanese 2yr bond spreads continue to widen, driving further losses for the Yen with the currency hovering around 112 against the greenback. The US-JP 2yr bond spread is now the widest since 2007 and with no signs that the BoJ are looking to exit their ultra-loose monetary policy, USDJPY may well push for higher levels.
Within the option market, risk reversals continue to suggest a moderation in demand for protection against JPY strength. 1-week risk reversals now at the highest level since July, implying that risks are tilted to the upside for USDJPY in the short term.
Notable Events to JPY Price Action
On the docket for next week, Japanese watchers will be keeping an eye on the latest BoJ rate decision. However, don’t expect fireworks, the BoJ will continue to maintain its ultra-loose monetary policy stance with inflation remaining some distance from the central bank’s target. Elsewhere, the latest CPI figures are to be released on Thursday in which the core inflation is expected to tick up 0.1ppt to 0.9%.
Next week’s Economic Calendar
Source: DailyFX
USDJPY PRICE CHART: DAILY TIMEFRAME (September 2017-September 2018)
Chart by IG
USDJPY Technical Levels
Resistance 1: 112.36 (76.4% Fibonacci Retracement)
Resistance 2: 113 (Psychological Level)
Support 1: 111.15 (50DMA)
Support 2: 111.00 (Psychological Level)
Disclosure:
JPY TRADING RESOURCES:
Disclosure:
JPY TRADING RESOURCES:
Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.DailyFX, the free news and research website of leading forex and CFD broker FXCM, delivers up-to-date analysis of the fundamental and technical influences driving the currency and commodity markets. With nine internationally-based analysts publishing over 30 articles and producing 5 video news updates daily, DailyFX offers in-depth coverage of price action, predictions of likely market moves, and exhaustive interpretations of salient economic and political developments. DailyFX is also home to one of the most powerful economic calendars available on the web, complete with advanced sorting capabilities, detailed descriptions of upcoming events on the economic docket, and projections of how economic report data will impact the markets. Combined with the free charts and live rate updates featured on DailyFX, the DailyFX economic calendar is an invaluable resource for traders who heavily rely on the news for their trading strategies. Additionally, DailyFX serves as a portal to one the most vibrant online discussion forums in the forex trading community. Avoiding market noise and the irrelevant personal commentary that plague many forex blogs and forums, the DailyFX Forum has established a reputation as being a place where real traders go to talk about serious trading.
Any opinions, news, research, analyses, prices, or other information contained on dailyfx.com are provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
** All times listed in GMT. See the full DailyFX economic calendar here.
less
How did you like this article? Let us know so we can better customize your reading experience.