USD/JPY – Yen Rally Continues, Drops Below 111

The Japanese yen continues to head higher, and has posted gains in the Monday session. Currently, USD/JPY is trading at 110.64, down 0.37% on the day. US markets are closed for Martin Luther King Day, so there are no US events. In Japan, PPI is expected to slow to 3.3%. On Tuesday, the US releases Empire State Manufacturing Index.

The yen posted four straight winning sessions last week, and is trading in green territory on Monday as well. The Japanese currency has gained 1.8% against the greenback in January, as the US dollar continues to show broad weakness. The Bank of Japan gave the yen a boost last week, after the BoJ reduced its bond purchases.  The Bank trimmed its purchase of 10 to 25 year bonds and 25 to 40 bonds by JPY 10 billion yen each, to JPY 190 billion yen and 80 billion respectively. The cut to the 10-25 year bonds was the first in more than a year. This has raised speculation that the Bank will taper its massive stimulus program, which would likely bode well for the Japanese yen.

The US dollar remains under pressure, as consumer data for December was a mixed bag. CPI slowed to 0.1%, down from 0.4% a month earlier. Core CPI was stronger, improving to 0.3%. Both indicators were within expectations, but pointed to weak inflation levels. On the bright side, consumer spending remained strong. December retail sales, boosted by Christmas shopping, were up 5.4% compared to a year ago. Although investors were not impressed with the December data, as the euro rally continued, the spending numbers point to a strong finish for the economy in 2017.

Dollar Deflates on Federal Holiday

USD/JPY Fundamentals

Sunday (January 14)

  • 18:50 Japanese M2 Money Stock. Estimate 4.0%. Actual 3.6%

Monday (January 15)

  • 1:00 Japanese Preliminary Machine Tool Orders. Actual 48.3%
  • All Day – US Bank Holiday
  • 18:50 Japanese PPI. Estimate 3.3%
  • 23:30 Japanese Tertiary Industry Activity. Estimate 0.4%

Tuesday (January 16)

  • 8:30 US Empire State Manufacturing Index. Estimate 18.5

*All release times are GMT

*Key events are in bold

USD/JPY for Monday, January 15, 2018

USD/JPY January 15 at 10:15 EDT

Open: 111.05 High: 111.19 Low: 110.52 Close: 110.64

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.21 109.11 110.10 111.53 112.57 113.55

USD/JPY posted losses in the Asian session. The pair has shown limited movement in the European and North American sessions

  • 110.10 is providing support
  • 111.53 is the next resistance line

Current range: 110.10 to 111.53

Further levels in both directions:

  • Below: 110.10, 109.11 and 108.21
  • Above: 111.53, 112.57, 113.55 and 114.59

OANDA’s Open Positions Ratios

In the Monday session, USD/JPY ratio is showing long positions with a majority (60%). This is indicative of trader bias towards USD/JPY reversing directions and moving lower.

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.