USD/JPY – Little Activity as ECB Statement Looms

The Japanese yen is showing limited movement on Thursday, as the pair trades just under the 118 line in the European session. In the US, today’s highlight is Unemployment Claims, with the indicator expected to dip to 301 thousand. The only Japanese event on the schedule is the BOJ Monthly Report, a minor event.

As expected, the BOJ held the course with its stimulus program and stated in its policy statement that it would increase base money at a pace of JPY 80 trillion each year. This gave a boost to the yen, as many market players were expecting additional stimulus from the BOJ, given the weak economy and lack of inflation. With oil prices continuing to drop, the BOJ may be forced to reconsider additional stimulus steps in order to avoid a recurrence of deflation, which hobbled the Japanese economy for years.

As the markets nervously eye the ECB policy meeting later on Thursday, is the euro’s inactivity the calm before the storm? It appears that the ECB will flash its trump card and implement a QE program. However, now that a QE is likely priced in, the question remains what will be the size of the program? The markets are anticipating QE of between EUR 500-600 billion, but some market players are saying that the ECB could go as high as EUR 800 billion. Traders should be prepared for some volatility in the currency markets after the announcement.

USD/JPY for Thursday, January 22, 2015

USD/JPY January 22 at 13:35 GMT

USD/JPY 117.71 H: 118.34 L: 117.46

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
113.64 115.56 116.69 117.94 118.69 119.83

 

  • USD/JPY posted gains in the Asian session, testing resistance at 117.94. The pair has retracted in the European session.
  • On the upside, 117.94 remains under pressure. 118.69 is stronger.
  • 116.69 is a strong support level.
  • Current range: 116.69 to 117.94

Further levels in both directions:

  • Below: 116.69, 115.56, 113.64 and 112.41
  • Above: 117.94, 118.69, 119.83, 120.63 and 121.69

 

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions on Thursday, continuing the direction we’ve seen all week. This is not consistent with the pair’s movement, as the yen has posted small losses. The ratio currently has a majority of long positions, indicative of trader bias towards the US dollar moving to higher ground.

USD/JPY Fundamentals

  • 5:00 Japanese BOJ Monthly Report.
  • 13:30 US Unemployment Claims. Estimate 301K.
  • 14:00 US HPI. Estimate 0.4%.
  • 15:00 US Consumer Confidence. Estimate -11 points.
  • 15:30 US Natural Gas Storage. Estimate -231B.
  • 16:00 US Crude Oil Inventories. Estimate 2.5M.

*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.