USD/JPY – Yen Steady, US Housing Sales Slide

USD/JPY is steady on Monday, as the pair trades at 111.70 early in the North American session. On the release front, it’s a very quiet start to the trading week. The sole US event on the schedule, Existing Home Sales was dismal as it slipped to 5.08 million. This was well short of the forecast of 5.32 million and marked a 3-month low.

With the Japanese economy struggling, pressure has been building on the BoJ to adopt further easing steps. However, the central bank did not make any changes to monetary policy last week, but rang warning bells about the economy and said that weak inflation levels would continue. On Thursday, the BoJ released the minutes of its January policy meeting, when it shocked the markets by adopting negative interest rates for the first time ever. There was no discussion about the BoJ’s bond-purchase program (QQE), but experts are of the opinion that the central bank could make significant easing moves in April, combining a rate cut with an expansion of QQE. If the BoJ does make a move, traders can expect the high-flying yen to reverse directions and lose ground.

As widely expected, the Federal Reserve remained on the sidelines and did not raise interest rates at its policy meeting on last week, maintaining the benchmark rate at 0.25%. The Fed statement noted that the US economy remains vulnerable to an uncertain global economy, but expects to raise rates later in the year due to moderate growth and “strong job gains”. The statement was dovish in tone, a clear departure from the December meeting, when the Fed raised rates for the first time in nine years and talked about four rate hikes over the course of 2016. In a short three months, global demand has weakened, precipitated by the Chinese slowdown, and US numbers have cooled in comparison to the economy’s torrid pace in the second half of 2015. If inflation and employment numbers push higher in next several months, a rate hike in mid-2016 seems a good bet.

USD/JPY Fundamentals

Monday (March 21)

  • 10:00 US Existing Home Sales. Estimate 5.32M. Actual 5.08M
  • 22:00 Japanese All Industries Activity. Estimate 1.9%

*Key releases are highlighted in bold

*All release times are DST

USD/JPY for Monday, March 21, 2016

USD/JPY March 21 at 10:00 DST

Open: 111.44 Low: 111.20 High: 111.81 Close: 111.72

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.37 109.87 111.50 112.48 113.86 114.65
  • USD/JPY was flat in the Asian and European sessions. The pair has posted small gains in North American trade
  • 111.50 has switched to support and remains under pressure
  • There is resistance at 112.48
  • Current range: 111.50 to 112.48

Further levels in both directions:

  • Below: 111.50, 109.87, 108.37 and 107.39
  • Above: 112.48, 113.86 and 114.65

OANDA’s Open Positions Ratio

USD/JPY ratio remains unchanged from last week. Long positions command a strong majority (66%), indicative of strong trader bias towards the pair moving to higher levels.

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.