USD/JPY: outlook for April 3-7

USD/JPY: outlook for April 3-7

2019-11-11 • Dikemaskini

USD/JPY tested 110.00 on the downside and then surged to 112.20 in the course of the past week as initial concerns about Donald Trump’s ability to implement his pro-growth policies have dissipated. Japanese economic data was a mixed bag. Household spending and CPI fell short of market’s expectations. At the same time, a jump in industrial production and lower unemployment rate indicate that Japan’s economic recovery is more or less solid. All these gains, however, are not convincing enough for the Bank of Japan to start the monetary policy tightening cycle. BoJ’s Governor Haruhiko Kuroda warned that he would need a more convincing evidence of underlying inflation before raising the bank’s long-term interest rate target.

Next week, USD/JPY will be driven mainly by the US fundamentals. Japan’s economic calendar is light with Tankan manufacturing & services indexes coming on Monday. The Bank of Japan’s core CPI is due on Tuesday. Many economists expect higher oil prices and a weaker yen to push Japan’s core inflation figures to 1%. But for the present moment, there is little sign of inflation rate increases. So, Japan’s CPI might post disappointing headlines.  The main focus will on the US manufacturing and non-manufacturing PMIs, FOMC meeting minutes and Friday’s labor market reports – NFP, average hourly earnings and unemployment rate.

Technically, USD/JPY should remain under pressure of the daily Ichomoku Cloud and the dead cross of the 50- and 100-day Moving Averages. It means that the pair should meet significant resistance at 113.00, 113.80 and 115.00. On the downside, support lies at 110.00 (psychological level) ahead of 108.35 (200-day MA).

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