TRENDING:

XAU/USD

EUR/USD

USD/JPY Forecast: Moved up with stocks, but has it gone too far?

The USD/JPY ticked up amid the US elections and the Fed decision.
US inflation and retail sales stand out in the upcoming week.
The technical picture looks bullish and so does the FX Poll for the upcoming week. Experts turn bearish later on.

Yohay Elam FXStreet

This was the week: USD still looking good after the Mid-Terms and the Fed

Democrats flipped the House while Republicans retained the Senate, as broadly expected. During 2018, the US Dollar enjoyed Trump's policies and the prospects of a divided government initially triggered some safe-haven flows into the Yen. However, as stocks reacted positively, the USD/JPY lifted its head once again.

The Fed left interest rates unchanged as expected and is on course to raise them in December, making it the fourth hike in 2018. While the FOMC Statement included a downgrade regarding the assessment of business investment, the Fed remains hawkish. The greenback advanced against many currencies but struggled to extend its gains against the safe-haven yen.

US data was mostly positive with the ISM Non-Manufacturing PMI remaining above 60 points.

Bank of Japan Governor Haruhiko Kuroda stayed optimistic about reaching the inflation target despite low inflation.

US events: Consumption and consumer prices

After a bank holiday on Monday, Tuesday's budget statement will be of interest, as America's debt is ballooning.

The first top-tier release of the week is on Wednesday with the inflation report. The Core Consumer Price Index fell short of expectations in September's report by remaining at 2.2% YoY. No change is expected in October. However, headline CPI is projected to accelerate from 2.3% to 2.4%. The Fed has two mandates: employment and inflation, with the latter lagging behind the former.

The second top-tier release is on Thursday. Results were mixed in September as headline sales hardly moved, core sales dropped, but the control group rose by a healthy 0.5%. All three figures carry expectations for substantial increases.

It is also worth keeping an eye open to political developments after the Mid-Terms ended. The Mueller investigation has been quiet ahead of the vote, but fresh indictments cannot be ruled out. Trump's firing of Attorney General Jeff Sessions opens the door to firing Mueller. Political instability may weigh on markets.

Here are the top US events as they appear on the forex calendar:

US forex calendar events November 12 16 2018

Japan: Preliminary GDP and also watch North Korea

The Japanese yen remains the ultimate safe-haven currency. It attracts buyers when equity markets fall and sellers when stocks are sought after. Stocks remain in the driver's seat.

As a safe-haven currency, the yen is also sensitive to developments around North Korea. An announcement of the second summit between Trump and North Korean Leader Kim Jong-un may weigh on the Japanese currency while a further deterioration in talks could send it higher.

Japan publishes fresh GDP data for the third quarter. The economy enjoyed an impressive growth rate of 0.7% QoQ or 3% annualized in Q2. A "payback" quarter is on the cards for Q3 with a drop in the economy's output. Also, investment figures are of interest later in the week.

Here are the events lined up in Japan:

Japan economic calendar November 12 16 2018

USD/JPY Technical Analysis

The USD/JPY is trading alongside a steep uptrend support line. Looking back to September, the scene was quite similar. Back then, the pair hit a high of 114.55 before tumbling down. Is this time different? So far, the USD/JPY did not reach overbought conditions: the Relative Strength Index (RSI) is below 70. Momentum remains to the upside while dollar/yen holds above both the 50-day and the 200-day Simple Moving Averages. All in all, the technical picture is bullish.

114.10 capped the pair recently and also in September when the pair later reached higher ground. 114.55 was the high point in 2018 recorded in early October. Further up, 115.00 is a very round number and 115.50 served as resistance in late 2017.

113.40 was a swing high in late October. The round number of 113.00 was a swing low before the recent advance. 112.55 provided support in late October and also separated ranges in September. 111.00 was a stubborn resistance line in August and also in early October.

USD JPY Technical Analysis November 12 16 2018

USD/JPY Sentiment

The FXStreet forex poll of experts shows a bullish bias for the upcoming week but a bearish twist afterward. The forecasts have been upgraded in comparison to the previous forecast, but the changes are limited.

Related Forecasts

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

GBP/USD bounces off lows, back above 1.3200

After bottoming out near 1.3160, GBP/USD manages to regain a bit of shine and reclaim the 1.3200 mark and beyond at the end of the week. Stronger-than-expected UK Retail Sales data seem to be helping the British Pound limit its losses, while the chaotic UK political environment keeps the bulls at bay for now.

EUR/USD looks consolidative around 1.1460

EUR/USD stages a modest rebound after slipping to a three-month low below 1.1420 at the end of the week. That said, the pair now looks to consolidate humble gains just above 1.1460 despite growing uncertainty surrounding the next round of US-Iran negotiations, which keeps the US Dollar’s downside contained.

Gold slips back to six-day lows, targets $4,100

Gold retreats for the third consecutive day on Friday, eroding gains seen in the first half of the week and approaching the key $4,100 mark per troy ounce. Indeed, the precious metal continues to face headwinds from the Fed's hawkish stance and renewed uncertainty surrounding the next round of US-Iran negotiations.

Breaking: Iran closes the Strait of Hormuz amid ceasefire deal violation

Iran says it is closing the Strait of Hormuz after accusing the United States (US) and Israel of violating the ceasefire. According to Iran, the decision came over the continued Israeli strikes in Lebanon. The Iranian Revolutionary Guard Corps Navy issued a warning to all vessels: "Do not approach the Strait of Hormuz; otherwise, your security will be jeopardized."

The Iran war didn't break the US economy, but what happens next?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.