USD/JPY Riding The Tiger (Forecast For July 10 – 14)

Dollar/yen advanced for the fourth week in a row, extending the rise alongside the uptrend support line. Can it continue further to the upside? It is getting closer to the cycle high of 114.30 and the steep uptrend could be hard to sustain.

This is a new format of the outlook and feedback is welcome. We cover the top fundamental news and outlook, a technical analysis on the daily chart and finally sentiment for the pair moving forward.

USD/JPY fundamental movers

Central bankers and Trump care

The Federal Reserve did not provide a clear message about the balance sheet reduction. Some want it to happen in September but others want to take their time. The unwinding of QE, aka Quantitative Tightening, is causing some jitters.

US data was mixed: soft data was mostly positive with strong showings from the various PMIs, while ADP and factory orders fell short of expectations.

North Korea tested an ICBM, rattling the US on Independence Day. The event sent USD/JPY quickly lower, but it recovered swiftly as well.

In Japan, some have called for an “implicit tapering” by the Bank of Japan: buying fewer bonds without making any announcement. So far, the BOJ continues buying bonds, pressuring the yen.

Yellen’s testimony, inflation, retail data

The upcoming week begins with echoes from the Non-Farm Payrolls report and also the G-20 Summit, including the first meeting between Trump and Putin. The focus then shifts to Yellen’s testimony on Wednesday and also on Thursday. This time, she will undoubtedly talk about monetary policy, moving markets.

Towards the end of the week, we will get inflation data, that has been quite weak and worrying in the US. Retail sales and consumer confidence will provide a picture of the wider economy.

In Japan, we will get the current account, PPI, and the revised industrial output data, but none of these moves markets.

Key news updates for USD/JPY

USD/JPY Technical Analysis

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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