USD/JPY – Steady in Light Holiday Trade

The Japanese yen has started the week quietly, as USD/JPY trades in the low-118 range. The yen remains at the lowest levels we’ve seen since August 2007. Will we see a 120 yen this week? On the release front, there are no Japanese releases on Monday as there is a bank holiday. In the US, there is just one release, Flash Services PMI. No change is expected in this reading.

The struggling Japanese economy has officially slipped into recession, as GDP has posted two straight declines. In Q3, GDP declined -0.4%, well below the estimate of 0.5%. Prime Minister Abe responded by delaying an increase in the sales tax to 10%. Abe then surprised the markets by announcing elections halfway through his term. The upcoming election could end up as a referendum on Abenomics, which has involved sharp monetary easing and heavy government spending.

In the US, there was a flurry of releases on Thursday. Consumer inflation met expectations, as CPI came in at 0.0% and Core CPI posted a gain of 0.2%. Unemployment Claims were almost unchanged, with a reading of 291 thousand. Philly Fed Manufacturing Index soared to 40.8 points and US Existing Home Sales improved to 5.26 million, pointing to expansion in the manufacturing and housing sectors.

USD/JPY for Monday, November 24, 2014

USD/JPY November 24 at 13:40 GMT

USD/JPY 118.25 H: 118.38 L: 117.58

USD/JPY Technical

• USD/JPY was flat in the Asian session. The pair has posted gains in the European session, breaking past resistance at 117.94.
• 117.94 has reverted to a support line. It remains a weak line and could see action in the North American session.
• 118.89 is a strong line of resistance.
• Current range: 117.94 to 118.89

Further levels in both directions:

• Below: 117.94, 116.66, 115.75, 114.65 and 113.68
• Above: 118.89, 119.83, 120.63 and 121.39

OANDA’s Open Positions Ratio

USD/JPY is pointing to gains in long positions on Monday. This is consistent with USD/JPY, which has posted slight gains. The ratio has a majority of long positions, indicative of trader bias towards the dollar continuing to move to higher ground.

USD/JPY Fundamentals

• 14:45 US Flash Services PMI. Estimate 57.3 points.

*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.