USD/JPY Forecast Oct. 19-23 – Yen Struggles With Low Inflation

Dollar/yen remains in calm waters, as the pair showed limited movement for a third successive week. In the upcoming week, Japanese data is limited to tier-2 releases. The US will release manufacturing and services PMIs late in the week. 

USD/JPY fundamental mover

Japan continues to struggle with low inflation levels. The Producer Price Index fell by 0.8%, marking an eighth straight decline. US consumer inflation slowed in September, as inflation levels remain at low levels. Both the headline and core readings dropped to 0.2%, down from 0.4% beforehand. The Philly Fed Manufacturing Index jumped to 32.3 in October, up from 15.0 points. This was the highest level since February.

Unemployment claims climbed to 898 thousand, the highest level in seven weeks. Retail sales rebounded in September. The headline figure rose 1.9% and the core reading showed a gain of 1.5%.

USD/JPY Daily Chart

USD/JPY Technical Analysis

  • We start at the round number of 108, an important monthly resistance line.
  • 107.29 (mentioned last week) is protecting the 107 level.
  • 106.44 is next.
  • 105.45 remains relevant. It ended the week as an immediate resistance line.
  • 104.50 is next.
  • 103.52 has held in support since March.
  • 102.13 is the final support line for now.

I am neutral on USD/JPY

The US dollar and Japanese yen are both safe-haven assets which have failed to draw much interest from investors who continue to show risk sentiment despite the COVID-19 pandemic.

See all the main events in the Forex Weekly Outlook.

Disclaimer: Foreign exchange (Forex) ...

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