Dollar/yen showed little movement for a second straight week, as the pair closed the week slightly above the 104 level. In the upcoming week, we’ll get a look at consumer data, with the release of Average Cash Earnings and Household Spending, as well as GDP.                                                             

USD/JPY fundamental mover

Japan’s numbers were mixed last week. Industrial Production registered a strong gain of 3.8%, above expectations. Retail sales rebounded with a sharp gain of 6.4%, ending a nasty streak of seven successive declines. However, Capital Spending plunged 10.6%, following a decline 11.3% beforehand.

The US manufacturing sector continued to grow, as the ISM Manufacturing PMI came in at 57.9, although this was weaker than the previous release of 59.3 points. The ISM Services PMI fell to 55.9, down from 56.6 points. Still, this was a sixth straight month of expansion. In testimony on Capitol Hill, Federal Reserve Chair Powell reiterated his message for further fiscal stimulus support from the federal government. Nonfarm payrolls dropped to 245,000, down sharply from 638,000. This missed the estimate of 480,000. Wage growth surprised with a gain of 0.3%, above the estimate of 0.1%.

See all the main events in the Forex Weekly Outlook

USD/JPY Technical Analysis

107.02 (mentioned last week) is an important monthly resistance line.

105.84 is next.

104.94 switched to a resistance role in mid-November, as the yen posted a strong rally.

104.11 is an immediate support line.

103.28 is next.

102.13 has provided support since March.

101.52 has held since March.

99.98 is the final support line for now.

USD/JPY Daily Chart

USD/JPY Sentiment

I am bearish on USD/JPY

The dollar has been in retreat mode against many of the major currencies, but hasn’t lost much against the yen, as investor appetite for risk has been strong, at the expense of the safe-haven dollar and yen.