USD/JPY – Yen Steady At Start of Week

USD/JPY has started the week with little movement, as the pair trades in the mid-102 range on Monday. US Existing Home Sales disappointed on Friday, as the key indicator slumped to its lowest level since July 2012. Monday has little action on the release front, as there is just one event out of the US, Flash Services PMI. In Japan, Corporate Services Price Index will be released later in the day, and the markets are expecting a respectable gain of 1.2%.

US numbers continue to raise concerns. After weak releases from Building Permits and the Philly Manufacturing Index, Existing Home Sales sagged on Friday, dropping to 4.62 million in January, compared to 4.87 million a month earlier. This was well short of the estimate of 4.73 million, and the lowest reading from the key indicator since July 2012.  The markets will be hoping for better news from New Home Sales on Wednesday.

Last week’s Federal Reserve minutes indicated that interest rates are unlikely to rise, even if unemployment drops to 6.5%. Previously, the Fed had said it would consider raising rates at the 6.5% threshold, but with unemployment falling faster than expected, Fed policymakers agreed that it would “soon be appropriate” to revise the Fed’s forward guidance regarding interest rate levels. The minutes also indicated that the Fed will likely continue trimming QE, barring any downturns in the economy.

There were no surprises in the BOJ minutes last week, as the central bank reiterated that the economy was growing at a moderate pace and it planned to continue its current monetary policy. The BOJ did note that it needed to be clear that its stimulus program could last more than two years. The central bank has said in the past that it was aiming to reach a level of 2% inflation within two years, but it does not want to be hamstrung by any deadlines, and said that quantitative and qualitative easing will continue as long as required. The BOJ’s estimate for GDP in fiscal 2013 remains unchanged at 2.7%, while the outlook for fiscal 2014 was lowered to 1.4% from 1.5%. On the inflation front, the forecast for fiscal 2013 is 0.7%, jumping to 3.3% in fiscal 2014.

USD/JPY for Monday, February 24, 2014

USD/JPY February 24 at 12:20 GMT

USD/JPY 102.47 H: 102.68 L: 102.17

USD/JPY Technical

• USD/JPY is showing little movement in Monday trade. The pair lost ground in the Asian session, dropping to a low of 102.17. The pair has since moved higher.
• On the upside, 102.53 is under strong pressure and could break during the day. There is stronger resistance at 103.30.
• 101.19 is providing support. Next is the key level of 100.00, which has remained intact since November.
• Current range: 101.19 to 102.53

Further levels in both directions:

• Below: 101.19, 100.00, 99.57 and 98.65
• Above: 102.53, 103.30, 104.17, 105.70, 106.85

OANDA’s Open Positions Ratio

USD/JPY ratio is almost unchanged in Monday trading. This is consistent with what we are seeing from the pair, which has started off the week quietly. Long positions continue to comprise a solid majority in the USD/JPY ratio, indicating trader bias towards the dollar posting gains against the yen.

The yen continues to show little movement on Monday. USD/JPY has edged higher in the European session.

USD/JPY Fundamentals

• 14:00 US Flash Services PMI. Estimate 56.9 points.
• 23:50 Japanese Corporate Services Price Index. Estimate 1.2%.

*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.