USD/JPY Forecast Jan. 7-11 – Apple Debacle Spooks Investors, Sends Yen Surging

The Japanese yen started 2019 with strong gains, as Dollar/yen posted sharp losses for a third straight week. Investors will be keeping a close eye on the Federal Reserve minutes and CPI reports, but the equity markets and investor risk apprehension will have a significant impact on the direction of the pair.

USD/JPY fundamental movers

Apple stunned the markets after saying it would miss its sales forecast for the fourth quarter. The company blamed a drop in iPhone sales in China, another sign of the toll from the U.S-China trade dispute. Investors responded by snapping up the safe-haven yen, which pushed the dollar below the 105 level, for the first time since March.

Risk appetite improved later in the week, after Fed Chair Jerome Powell preached caution and the U.S. posted a stellar NFP, but the yen still ended the week with gains.

See all the main events in the Forex Weekly Outlook

USD/JPY Technical Analysis

With the yen continuing to post strong gains, we begin at lower levels:

112.25 provided support in early December and it defends the 112 level.

111.65 was a swing low in October, Close by, 111.40 was another swing low in October. 

110.40 is next. Below, 109.70 was a swing low in late August and is protecting the symbolic 110 level.

Close by, 109.35 was a cushion in mid-July. 108.70 was a cushion early in the summer and 108.10 a swing low in late May.

107.50 capped the pair in early April.

105.66 was tested late in the week as the pair dropped sharply.

104.60 is the final level for now.

USD/JPY Daily Chart

USD/JPY Sentiment

I am bearish on USD/JPY.

The safe-haven yen has capitalized on the recent turmoil in the equity markets, but risk appetite appears to have improved, as investors are showing renewed appetite for risk currencies. The markets are hopeful that U.S-China talks this week will ease tensions between the world’s two largest economies.


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