|premium|

USD/JPY Forecast: Underpinned by stocks and yields

USD/JPY Current price: 110.52

  • Wall Street posted all-time closes on Friday, lifting USD/JPY.
  • Japan returns from a long weekend with the release of the Jibun Bank Manufacturing PMI.
  • USD/JPY has room to extend its advance but needs additional technical confirmation.

The USD/JPY pair peaked at 110.58, its highest for the week, ending it nearby. The pair traded alongside government bond yields, bottoming at 109.72 as the yield of the 10-year US Treasury note plummeted to 1.12% and recovering as the latter settled near 1.30%. Also, Wall Street closed at all-time highs on the back of solid earnings, providing additional support to USD/JPY.

Japan returns from a long weekend on Monday and will publish the flash Jibun Bank Manufacturing PMI, foreseen in July at 52.3 from 52.4 in the previous month.

USD/JPY short-term technical outlook

The USD/JPY pair could extend its advance, but additional confirmations are required. The daily chart shows that it settled above a flat 20 SMA, while the longer ones maintain their bullish slopes below the current level. Technical indicators advanced, although the Momentum remains below its 100 level. In the 4-hour chart, the pair settled above all of its moving averages, with the 20 SMA heading firmly up but below the longer ones. Finally, the Momentum indicator retreats within positive levels, while the RSI consolidates around 65. The pair needs to break above 110.69, July 14 high, to confirm a bullish extension ahead.

Support levels: 110.25 109.80 109.40

Resistance levels: 110.70 111.10 111.50

View Live Chart for the USD/JPY

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to PremiumSign In

Author

Valeria Bednarik

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

More from Valeria Bednarik
Share:

Editor's Picks

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans. 

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.