USD/JPY – Yen Staggers to 2014 Finish Line at 120

USD/JPY ended 2014 on a quiet note, with limited movement on Wednesday. The pair closed the day short of the 120 level, at 119.68. Japanese and US markets are closed on Thursday for the New Year’s holiday. US markets will resume action on Friday, highlighted by ISM Manufacturing PMI.

US releases wrapped up 2014 with mixed results. Unemployment Claims surprised with a sharp rise, coming in at 298 thousand, compared with 280 thousand in the previous reading. The estimate stood at 287 thousand. On the housing front, Pending Home Sales bounced back from a decline in the previous reading, posting a gain of 0.8% in December. This beat the forecast of 0.6%. The news was not as good from Chicago PMI, which dropped to 58.3 points, its worst showing since June. The reading fell short of the estimate of 60.2 points.

With the US economy showing better numbers as we head into 2015, the US consumer is showing more optimism about the economy. On Tuesday, CB Consumer Confidence rose to 92.6 points, up from 88.8 points a month earlier. Although this missed the estimate of 94.6, this was a solid reading which follows last week’s UoM Consumer Sentiment report. That indicator has been on an upward swing and hit 93.6 points in December, its highest level since February 2007. Consumer confidence numbers are closely watched, as increased confidence should translate into more spending by consumers, creating more jobs and strengthening economic activity.

The yen started 2014 at the 105 line, but the currency has taken a tumble, as USD/JPY trades just under the key 120 level as we wrap up the year. This sharp decline marks the fourth annual loss for the hapless Japanese currency. Last week, Prime Minister Shinzo Abe announced a stimulus program to kick-start the sluggish economy and we could see more stimulus if the economic conditions don’t improve. With the Federal Reserve likely to raise interest rates sometime in 2015, the divergence in monetary stance between the Fed and the BOJ will likely push the yen to lower levels in 2015.

USD/JPY for Thursday, January 1, 2015

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
116.69 117.94 118.69 119.83 120.63 121.39

 

  • USD/JPY showed limited movement on Wednesday, testing resistance at 119.83.
  • 119.83 is a weak resistance line. 120.63 is stronger.
  • 118.69 continues to provide strong support.
  • Current range: 118.69 to 119.83

Further levels in both directions:

  • Below: 118.69, 117.94 and 116.69 and 115.56
  • Above: 119.83, 120.63, 121.39, 122.18 and 124.16

 

OANDA’s Open Positions Ratio

USD/JPY has a majority of long positions, indicative of trader bias towards the dollar breaking out of range and posting gains.

USD/JPY Fundamentals

  • There are no Japanese or US releases on Thursday.

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.