USD/JPY – Sliding Yen Flirts With 105 Level

USD/JPY continues to lose ground on Wednesday, as the pair trades at the 105 line late in the European session. In the US, there are no major US events on the calendar. There are no Japanese releases on Wednesday, but the markets will be keeping a close eye on the Bank of Japan, as the central bank releases its monetary policy statement early Thursday.

Recent Japanese numbers have been steady, so the markets are not expecting any surprises from upcoming BOJ minutes. July’s inflation numbers were strong and met expectations, as taming deflation has become one of the government’s major economic success stories. Capital Spending hit 3.0% in August, well short of the forecast of 3.8%. Average Cash Earnings, which measures employment income, shot up 2.6% last month, crushing the estimate of 0.9%.

Despite the fact that recent Japanese data has been solid, the yen has been unable to hold its ground against the dollar, thanks to excellent US numbers. On Tuesday, ISM Manufacturing PMI impressed the markets, climbing to 59.0 points, its best showing since April 2011. The index easily beat the estimate of 57.0 points. The strong showing follows an unexpectedly strong GDP, which hit 4.2%. With the US economy moving forward at a fast clip, the US dollar has taken full advantage and has made broad gains this week against its major rivals. US Employment data will be in the spotlight for the remainder of the week, with the release of ADP Nonfarm Payrolls on Thursday, followed by the official Nonfarm Payrolls and the unemployment rate on Friday.

 

USD/JPY for Wednesday, September 3, 2014

USD/JPY September 3 at 13:35 GMT

USD/JPY 105.00 H: 105.31 L: 104.86

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
102.53 103.07 104.17 105.44 106.85 107.68

 

  • USD/JPY edged lower in the Asian session and dropped below the 105  line. The pair is stable in the European session.
  • On the downside, 104.17 has strengthened as the pair continues to move higher.
  • 105.44 is an immediate resistance line. There is stronger resistance at 106.85.
  • Current range: 104.17 to 105.44

Further levels in both directions:

  • Below: 104.17, 103.07, 102.53 and 101.19
  • Above: 105.44, 106.85, 107.68 and 108.57

 

OANDA’s Open Positions Ratio

USD/JPY ratio has a majority of short positions, indicative of trader bias towards the yen reversing directions and moving higher.

 

USD/JPY Fundamentals

  • 14:00 US Factory Orders. Estimate 10.9%.
  • All Day – US Day Total Vehicle Sales. Estimate 16.5M.
  • 18:00 US Beige Book.

*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.