USD/JPY Forecast June 29-July 3 – NFP, Japanese Tankan Indices In Focus

For a second straight week, Dollar/yen showed little movement. On the fundamental front, Japan releases the Tankan manufacturing and services indices which are key gauges of economic activity. In the U.S., the Federal Reserve will be in focus. Fed Chair Jerome Powell will testify before a congressional committee and the Fed releases the minutes of its June meeting. The week wraps up with nonfarm payrolls and wage growth.

USD/JPY fundamental mover

Japan’s manufacturing sector continues to struggle. Manufacturing PMI slowed for a fifth successive month, posting a read of 37.8 in June, shy of the forecast of 39.5 points. The BoJ Core CPI, the bank’s preferred gauge of inflation, was flat at 0.0%, after a read of -0.1% beforehand. Tokyo Core CPI remained unchanged at 0.2 percent.

In the U.S., manufacturing improved sharply, as Manufacturing PMI climbed from 39.8 to 49.6 points. The estimate stood at 50.0, which separates contraction from expansion. Durable goods orders sparkled in May. The headline figure climbed 4.0%, rebounding after a decline of 7.4 percent. The core reading surged 15.8%, rebounding from a read of-17.2% beforehand.

Final GDP for the first quarter showed a decline of 5.0%, unchanged from the advance estimate.Unemployment claims dropped from 2.43 million to 2.12 million, which was within expectations. The news was not as good on the consumer front, personal spending declined by 13.6%, after a decline of 7.5% beforehand.

See all the main events in the Forex Weekly Outlook

USD/JPY Technical Analysis

110.63 has been a resistance line since late March.

109.73 is protecting the 110 level, which has psychological significance.

108.70 (mentioned last week) is next.

108.10 switched to resistance in early June, when USD/JPY fell sharply.

107.30 is an immediate resistance line.

106.61 is the first line of support.

105.55 has held in support since mid-March.

104.65 follows.

The round number of 104 is the final support level for now.

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