USD/JPY – Surging Dollar Punches Past 100

The US dollar continues to post gains against the retreating Japanese yen. USD/JPY gained about 100 points on Thursday, and the upward move is continuing on Friday, as the pair trades in the mid-100 range. In the US, today’s highlight is the Empire State Manufacturing Index. There are no Japanese releases on Friday.

On Thursday, the dollar flexed some muscle, as it broke above the key 100 level for the first time in two months. The US currency took advantage of a weak Japanese GDP release for Q3. Although the gain of 0.5% edged above the estimate of 0.4%, GDP has been falling in 2013, pointing to weakening economic activity. The yen responded with a 100-point loss against the surging dollar.

Unemployment Claims have been fairly steady over the past few weeks, but with speculation increasing about a possible December taper by the Federal Reserve, every employment release is under the market’s microscope. On Thursday, the key indicator showed little change with a reading of 339 thousand, but this was above the estimate of 331 thousand. There wasn’t any relief from Thursday’s other key release, Trade Balance. The October deficit widened to -$41.8 billion, compared to -$38.8 billion in September. This was well above the estimate of -$38.7 billion.

Incoming Federal Reserve head Janet Yellen testified before the powerful Senate Banking Committee on Thursday. Yellen is a strong supporter of QE, and told the committee that the present level of asset purchases should continue until growth improves and unemployment falls. She said that the labor market and economy are  performing “far short of their potential”, but added that she expects inflation to remain below the Fed’s target of 2%. Yellen, who will become the first woman to head the Federal Reserve, takes over from Bernard Bernanke in January.

 

USD/JPY for Friday, November 15, 2013

Forex Rate Graph 21/1/13

USD/JPY November 15 at 11:20 GMT

USD/JPY 100.41 H: 100.43 L: 99.94

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
98.15 98.92 100.00 101.19 102.53 103.30

 

  • USD/JPY continues to post gains in Friday trading. The pair has touched a high of 100.43 in the European session.
  • On the downside, 100.00 is providing support. This line is not strong and could face pressure if the yen reverses direction. There is stronger support at 98.92.
  • The pair is facing resistance at 101.19. The next resistance line is at 102.53, which has remained in place since early May.
  • Current range: 100.00 to 101.19

 

Further levels in both directions:

  • Below: 100, 98.92, 98.15, 97.18 and 96.00
  • Above: 101.19, 102.53, 103.30 and 104.17

 

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in short positions, continuing the trend we have seen throughout the week. This is not reflected in the current movement of the pair, as the yen continues to lose ground against the US dollar. This week’s movement in the ratio means that long positions have a slight majority, indicative of a trader bias towards the US dollar continuing to post gains at the expense of the yen.

The dollar continues to post gains and has broken above the key 100 level. Will the upward trend continue? With no major releases out of the US, we could see the pair settle down during the day.

 

USD/JPY Fundamentals

  • 13:30 US Empire State Manufacturing Index. Exp. 5.2 points.
  • 13:30 US Import Prices. Exp. -0.4%.
  • 14:15 US Capacity Utilization Rate. Exp. 78.3%.
  • 14:15 US Industrial Production. Exp. 0.1%.
  • 15:00 US Wholesale Inventories. Exp. 0.5%.

 

*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.