USD/JPY: downward correction expected on a break below 112.60
The USD/JPY extended its gains on higher yields and as markets ignored the tariffs. The Fed decision is left, right, and center in the last week of September. The pair is trading in an uptrend channel on the daily chart.
1. Technical Overview
Meanwhile, and despite the positive momentum in equities persist, and US Treasury yields hold to recent gains, the pair trades around 112.75. In the 4 hours chart, the price remains well above bullish 100 and 200 SMA, while technical indicators are losing directional strength well above their mid-lines, suggesting that selling interest remains limited. Above the mentioned daily high, the next resistance is 113.17 July´s high, while below 112.60, the pair could correct lower ahead of the weekend.
Support levels: 112.60 112.15 111.80
Resistance levels: 112.85 113.20 113.50
USD/JPY PRICE SENTIMENT
USD/JPY BULLISH PERCENTAGE INDEX
Rallies continue to be very well capped, with the medium-term outlook still favouring lower tops and lower lows. Look for a daily close back below 109.75 to strengthen the bearish outlook, opening the door for the start to a move back down towards 108.00 which guards against the 104.60 area 2018 low.
USD/JPY Pivot points
USD/JPY trading positions
2. Fundamental Overview
The USD/JPY pair continued rallying during the Asian session, to hit 112.86, its highest since July 19 amid persistent dollar's weakness, with USD selling resuming by the end of the US session. Japan's National CPI hit 1.3% YoY well above the 1.1% expected or the previous 0.9%, although the core reading excluding volatile food and energy prices, met market's expectations by printing 0.4%. The September preliminary Nikkei Manufacturing PMI showed that the pace of growth was below the expected one, with the index printing 52.9, above the previous 52.5, but below the forecasted 53.1. The All Industry Activity Index came in at 0.0% in July, below the 0.2% expected and with the previous month reading revised to -0.9%. The US will see today the release of the September preliminary Markit indexes, seen above final August readings.
USDJPY FUNDAMENTALS TODAY
3. Latest News & Analysis
Influential Institutions & People for the USD/JPY
The US Dollar Japanese Yen can be seriously affected by news or the decisions taken by two main central banks:
The Bank of Japan is the central bank of Japan and it's a juridical person established based on the Bank of Japan Act, nor being a government agency either a private corporation. The most important missions of the BOJ are the following: to issue and manage banknotes, to implement monetary policy and to ensure stability of the financial system. Almost all of the decisions are taken by the Policy Board, formed by a bunch of members working to provide currency and monetary control and setting the next moves that the central bank will take.
On the other
Haruhiko Kuroda was nominated, by Prime Minister Shinzo Abe, as Governor of the Bank of Japan in March 2013. He had previously worked as President of the Asian Development Bank for 8 years. As the head of the BOJ, he has a major influence over the Japanese Yen. His words are usually followed by traders in order to find any clue of next possible trend in the currency.
Janet L. Yellen (born August 13, 1946) took office as Chair of the Board of Governors of the Federal Reserve System (Fed) on February 3, 2014, for a four-year term ending February 3, 2018. She had already previously served as a Vice Chair from 2010 to 2014. This American economist also serves as Chairman of the Federal Open Market Committee (FOMC), the System's principal monetary policymaking body. Her declarations are also an important source of volatility, especially for the US Dollar and the currencies traded against it.
BOJ NEWS & ANALYSIS
FED NEWS & ANALYSIS
The USD/JPY (or US Dollar Japanese Yen) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: EUR/USD, GBP/USD, AUD/USD, USD/CHF, NZD/USD and USD/CAD. Japanese Yen has a low interest rate and is normally used in carry trades. This is the reason why is one of the most trades currencies worldwide. In this pair the US Dollar is the base currency and the Japanese Yen is the counter currency. The pair represents American (from United States of America) and Japanese economies.
Trading this currency pair is also known as trading the "ninja" or the "gopher", although this last name is more frequently used when reffered to the GBP/JPY currency pair. The US Dollar Japanese Yen usually has a positive correlation with the following two pairs: USD/CHF and USD/CAD. The nature of this correlation is dued to the fact that both currency pairs also use the US Dollar as the base currency. The value of the pair tends to be affected when the two main central banks of each country, the Bank of Japan (BoJ) and the Federal Reserve Bank (Fed), face serious interest rate differential.
USDJPY 2018 YEARLY FORECAST
The GBP/USD (or Pound Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs worldwide. This group also includes the following currency pairs: EUR/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The pair is also called 'The Cable', reffering to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America. This term was originated in the mid-19th century and it makes GBP/USD one of the oldest currency pairs in the world.
The popularity of the Pound Dollar is due to the fact that represents two strong economies: British and American (from United States of America). The Cable is a widely observed and traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. After the result of the Brexit referendum, where the majority of the British voted to abandon the European Union, GBP/USD has been suffering some turbulence in the Forex market as a consequence of the associated risks of leaving the single market.
The EUR/USD (or Euro Dollar) currency pair is one of the 'Majors', or most important pairs in the world. This group also includes GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The Euro Dollar gathers two main economies: the European and American (from United States of America) ones. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since this pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear.
Normally, the EUR/USD is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U.S. session. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions. At noon activity slows down as traders step out for lunch and then picks back up again as the U.S. comes online.