USD/JPY – Yen Hits 4-Month High, Japanese Inflation Improves

The Japanese yen has edged lower in Monday trading. In the North American session, USD/JPY is trading at 110.30. On the release front, Japanese SPPI improved to 0.8%, above the estimate of 0.5%. In the US, there are no economic indicators, but we’ll hear from two FOMC members – Charles Evans and Robert Kaplan. On Tuesday, the US releases CB Consumer Confidence.

The Japanese manufacturing sector has been hard hit by weak global demand, but the picture has brightened in recent months. Flash Manufacturing PMI, an important gauge of the sector, has indicated slight expansion for six straight months, and this positive trend is expected to continue in the March release. Global demand has been increasing, and a relatively weak Japanese currency has made Japanese goods more competitive on world markets. Bank of Japan Deputy Governor Kikuo Iwata spoke before a monetary policy committee last week, and addressed the issue of a weak Japanese currency. Iwata noted that there were also negative aspects to a weak currency, and stated that the BoJ was aiming to bolster inflation through a rise in wages and productivity, rather than relying on a weak yen.

The US dollar enjoyed an impressive run after Donald Trump’s election last November. However, the euphoria over President Trump’s upset election win is long past. The inquiry into the Trump administration’s links with Russia continues to make headlines, and is another cause for concern for nervous investors. Trump has been in office for over two months, but he has yet to provide any details over even an outline of economic policy. Last week, Trump’s proposed bill to change Obamacare was not even voted on, as the White House could not garner enough support to pass the bill. This debacle will only increase market uneasiness over Trump, and the safe-haven yen could make inroads against the greenback if investors lose their appetite for risk.

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USD/JPY Fundamentals

Sunday (March 26)

  • 19:50 BoJ Summary of Opinions
  • 19:50 Japanese SPPI. Estimate 0.5%. Actual 0.8%

Monday (March 27)

  • 17:15 US FOMC Member Charles Evans Speech
  • 22:30 US FOMC Robert Kaplan Speech

Tuesday (March 28)

  • 14:00 US CB Consumer Confidence. Estimate 113.9

*All release times are GMT

*Key events are in bold

USD/JPY for Monday, March 27, 2017

USD/JPY March 27 at 10:50 EST

Open: 110.54 High: 110.58 Low: 110.10 Close: 110.34

USD/JPY Technical

S3 S2 S1 R1 R2 R3
107.49 108.54 109.77 110.94 112.57 113.80

USD/JPY edged lower in the Asian and European sessions. The pair has reversed directions and moved higher in North American session

  • 109.77 is providing support
  • 110.94 is the next resistance line
  • Current range: 109.77 to 110.94

Further levels in both directions:

  • Below: 109.77, 108.54 and 107.49
  •  Above: 110.94, 112.57, 113.80 and 114.83

OANDA’s Open Positions Ratio

In the Monday session, USD/JPY ratio is showing long positions with a majority (62%). This is indicative of trader bias towards USD/JPY reversing directions and moving higher.

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.