The Dollar/yen pair was range-bound throughout the week and ended the week unchanged. The highlight this week will be the Bank of Japan rate decision.
USD/JPY fundamental mover
In Japan, consumer indicators headed lower. Household Spending declined by 7.6%, marking a tenth straight decline. Average Cash Earnings slipped 1.3%, after a decline of 1.7% beforehand. Japan’s economy contracted by 7.9% in Q2, revised upwards from -8.1%. In the manufacturing sector, the Business Survey Manufacturing Index improved to 0.1, up sharply from -52.3 beforehand.
In the US, unemployment claims were worse than expected. The indicator was almost unchanged at 884 thousand, higher than the estimate of 838 thousand. Inflation remained weak, as consumer inflation slowed in August. Both the headline and core readings reading dropped from 0.6% to 0.4%. Still, both releases beat their estimates. The Producer Price Index, another important inflation gauge, also slowed in August.
USD/JPY Daily Chart
USD/JPY Technical Analysis
- 108.88 has provided resistance since early June.
- 108.02 is next.
- 107.29 (mentioned last week) is protecting the 107 level.
- 106.44 remains a weak resistance line.
- 105.45 is the first support level.
- 104.50 has provided support since late July.
- 103.52 is the final support line for now.
I am bullish on USD/JPY
With the US economy showing signs of recovery, sentiment towards the US dollar has increased. This could translate into gains for USD/JPY this week.
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