USD/JPY – Steady as Markets Eye US Housing Data

USD/JPY is steady as we begin the new trading week. The pair was trading in the high-97 range early in the North American session. The US dollar remains under pressure against the major currencies, following a lower than expected US GDP on Friday. Today’s highlight is US Pending Home Sales. There are no releases out of Japan on Monday due to banking holiday.

As was widely expected, the Bank of Japan did not announce any new monetary stimulus at its policy meeting on Friday. The BoJ did state that it could take more than two years to reach its 2% inflation target. This possibility has been underscored by recent Japanese inflation releases, which continue to point to deflation in the economy, despite the best efforts of the BOJ to create some inflation. This could mean that the central bank will resort to further easing measures later in the year.

Meanwhile, the OECD has weighed in on developments in Japan. The well-respected organization said it was encouraged by the government’s efforts to restore growth by easing monetary policy and achieve a 2% inflation target. However, the OECD noted its concern about the rising national debt, which is more than double the size of the Japanese economy. However the rating agency Standard & Poor was less effusive in its praise, stating that it had found little evidence of the economy improving, and warned that a downgrade to Japan’s debt was a real possibility.

There was more disappointing news out of the US on Friday, as GDP fell below expectations. With a long string of weak releases for the past month, the GDP reading appeared to underscore the recent disappointing data. The key indicator improved sharply, climbing from -0.1% to 2.5%. However, the markets had anticipated a gain of 3.1%. The weaker than expected reading from one of the most important economic indicators should serve as a wakeup call that the US economy is hitting turbulence, which could affect the US dollar.

 

USD/JPY for Monday, April 29, 2013

Forex Rate Graph 21/1/13

USD/JPY April 29 at 13:15 GMT

USD/JPY 97.86 H: 97.97 L: 97.35

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
95.27 96.03 97.24 98.45 99.57 100.00

 

USD/JPY is steady in Monday trading. On the downside, the pair is receiving support at 97.24. The next support level is at 96.03, protecting the 96 level. The pair faces resistance at 98.45. We could see this line face some pressure if the US dollar shows any upward momentum. This is followed by resistance at 99.57.

  • Current range: 97.24 to 98.45

 

Further levels in both directions:

  • Below: 97.24, 96.03, 95.27 and 94.19
  • Above: 98.45, 99.57, 100, 100.54 and 101.81

 

OANDA’s Open Position Ratios

USD/JPY is showing movement in the direction of long positions. Although we are not seeing this reflected in the pair, which has been quiet, this could be an indication that the US dollar will improve. Long positions make up a solid majority in the ratio, indicating that trader sentiment is strongly biased towards the dollar pushing higher at the expense of the yen.

After coming very close to the 100 level, the yen has fought back, and is now trading close the 98 line. The dollar remains under pressure following the weak GDP reading. We could see some movement from the pair later today, as the US releases key housing data.

 

USD/JPY Fundamentals

  • 12:30 US Core PCE Price Index. Estimate 0.1%. Actual 0.0%
  • 12:30 US Personal Spending. Estimate 0.2%. Actual 0.2%.
  • 12:30 US Personal Income. Estimate 0.4%. Actual 0.2%.
  • 14:00 US Pending Home Sales. Estimate 1.1%.

 

*Key releases are highlighted in bold

*All release times are GMT

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.