USD/JPY – Yen Continues to Improve as Pair Drops Below 99

The Japanese yen continues its upwards trend, as USD/JPY trades below the 99 line in Monday’s European session. Taking a look at economic news, the US ended last week on a sour note, as UoM Consumer Sentiment dropped to a five-month low. The dollar also responded negatively to news that Lawrence Summers has withdrawn his nomination to replace Federal Reserve head Bernard Bernanke. There are no key US events on Monday, but the markets will be keeping an eye on Empire State Manufacturing Index. Monday is a bank holiday in Japan and the markets are closed.

US releases have run into some turbulence, and UoM Consumer Sentiment looked awful on Friday. The key indicator dropped from 80.0 points in July to 76.8 in August, its lowest level since March. This weak figure comes on the heels of weak US retail sales releases on Thursday. The yen has taken advantage of these poor US numbers and has gained about 150 points since the middle of last week. Will the US turn things around? The markets will be hoping for better news from the next key release, Core CPI, which will be released on Tuesday.

Bernard Bernanke will step down as head of the US Federal Reserve at the end of January, and former Treasury Secretary Lawrence Summers was considered the leading contender. However, Summers has withdrawn his nomination, leaving Vice Chairman Janet Yellen as the favored candidate. Yellen is considered dovish, and may be hesitant when it comes to QE tapering. The dollar responded to the news of Summers’ withdrawal by losing ground against the major currencies.

 

USD/JPY for Monday, September 16, 2013

Forex Rate Graph 21/1/13

 

USD/JPY September 16 at 12:00 GMT

USD/JPY 98.86 H: 99.10 L: 98.70

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
97.18 97.83 98.43 99.45 100.00 100.85

 

  • USD/JPY has edged lower in Monday trading. The pair touched a high of 99.10 in the Asian session but has dipped back under the 99 line.
  • The pair is facing resistance at 99.45. This is followed by the all-important 100 level.
  • On the downside, USD/JPY is receiving support at 98.43. This line could face strong pressure if the yen continues to point upwards. This is followed by stronger support at 97.83.
  • Current range: 98.43 to 99.45

 

Further levels in both directions:

  • Below: 98.43, 97.83, 97.18 and 96.20
  • Above: 99.45, 100, 100.85, 101.66 and 102.53

 

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to movement towards long positions in Monday trading, continuing the trend we saw last week. This is not reflected in the pair’s current movement, as the yen has posted gains against the dollar. The ratio is made up of a solid majority of long positions, indicative of strong trader bias towards the dollar reversing direction and moving to higher ground.

USD/JPY continues to move lower, as the pair trades in the high-98 range. With no major US releases on Monday, we could see the pair trade quietly in the North American session.

 

USD/JPY Fundamentals

  • 12:30 US Empire State Manufacturing Index. Estimate 9.2 points.
  • 13:15 US Capacity Utilization Rate. Estimate 77.8%.
  • 13:15 US Industrial Production. Estimate 0.5%.

 

*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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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