USD/JPY – Yen Starts Week Close to 120

USD/JPY is steady on Monday, following a week of sharp losses for the wobbly Japanese yen. USD/JPY is trading close to the 120 line late in the European session. On the release front, it’s a very quiet start to the week, with just two releases. In Japan, the BOJ released its monthly report, a minor event. Over in the US, we’ll get a look at Existing Home Sales. The markets are expecting the indicator to soften in November, with an estimate of 5.21 million.

The US dollar made strong gains against its major rivals last week following the Federal Reserve policy statement. Previous Fed policy statements have usually stated that the Fed would maintain low rates for a “considerable time”, but the December statement changed terminology, saying the Fed would be “patient” before raising rates. In a follow-press conference, Federal Reserve chair Janet Yellen was less ambiguous, saying that the Fed was unlikely to raise rates for the “next couple of meetings”. The markets took this to mean that a rate hike is in the works, but not before April. The yen was down sharply on the news as USD/JPY gained about 130 points on Wednesday.

Prime Minister Shinzo Abe won a convincing electoral victory last week, but he will have little time to savor the win as he grapples with a struggling economy. Growth and inflation remain well below the government’s target and the BoJ’s radical monetary easing scheme has ravaged the yen, which remains close to the 120 level. With the BOJ expected to maintain or even ease its monetary stance, we’re unlikely to see much improvement from the Japanese currency in the near future.

USD/JPY for Monday, December 22, 2014

USD/JPY December 22 at 13:00 GMT

USD/JPY 119.93 H: 119.94 L: 119.32

USD/JPY Technical

• USD/JPY edged higher in the Asian session. The pair has been steady in European trade and broke above resistance at 119.83.
• 119.83 has reverted to a support role as the pair has posted slight gains.
• 120.63 is an immediate resistance line.
• Current range: 119.83 to 120.63

Further levels in both directions:

• Below: 119.83, 118.69, 117.94, 116.69 and 114.57
• Above: 120.63, 121.39, 122.18 and 124.16.

OANDA’s Open Positions Ratio

USD/JPY ratio is pointed to gains in short positions on Monday. This is not consistent with the pair’s movement, as the dollar has posted small gains. The ratio has a majority of long positions, indicative of trader bias towards the dollar moving higher.

USD/JPY Fundamentals

• 5:00 BOJ Monthly Report.
• 15:00 US Existing Home Sales. 5.21M.

*Key releases are highlighted in bold

*All release times are GMT

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