USD/JPY Forecast April 6-10 – Volatility Eases For Yen

USD/JPY fundamental mover

Japanese retail sales were unexpectedly strong in February, with a gain of 1.7%. This beat the estimate of -1.5%, and easily ended a string of four consecutive declines. The Tankan indices slowed considerably in the fourth quarter. The Manufacturing index slowed fell to -8, down from zero. The Services index fell from 20 to 8 points.

In the U.S. the spotlight was on employment numbers, which were a disaster, as the COVID-19 virus has paralyzed much of the U.S. economy. Jobless claims soared to 6.6 million, more than double to 3.2 million a week earlier. Nonfarm payrolls fell by 701 thousand, much worse than the estimate of -100 thousand. The unemployment rate shot up to 4.4% up from 3.5 percent. The estimate stood at 3.8 percent. On the manufacturing front, the ISM Manufacturing PMI slowed to 49.1 in March, down from 50.1 a month earlier. Still, this easily beat the forecast of 44.9 points.

USD/JPY Technical Analysis and Updates

• We start with resistance at 111.69.
• 110.62 is next.
• 109.73 is protecting the 110 level, which has psychological significance.
• 108.70 is an immediate support level.
• 108.10 has switched to a support role after USD/JPY broke above it last week.
• 107.30 was tested throughout the week.
• 106.61 is next.
• 105.55 has held firm in support since mid-March.
• 104.65 is the final support line for now.

USD/JPY Daily Chart

USD/JPY Sentiment

I am bullish on USD/JPY.

The U.S. dollar has emerged as the primary safe-haven asset in the current crisis, as the yen has been forced to take a back seat. The greenback has performed fairly well despite some appalling job numbers, and the outlook for the dollar remains positive.