USD/JPY – Japanese Yen Pauses After Strong Week

The Japanese yen has edged lower in the Monday session. In North American trade, USD/JPY is trading at 105.96, up 0.20% on the day. On the release front, the sole Japanese event is the 30-year bond yield. In the US, the ISM Non-Manufacturing PMI slowed to 59.5, but managed to beat the estimate of 58.9 points.

It was a good week for the Japanese yen, which improved 1.3%. The currency received a boost on Friday after Bank of Japan Governor Haruhiko Kuroda said that the BoJ would consider exiting from its ultra-accommodative monetary policy if its inflation target of around 2020 was reached in early 2020. Kuroda’s remarks were unusual in that they mentioned a possible “exit” from its stimulus program, and this caught the markets off guard. The BoJ has been lagging behind the Fed and other central banks in winding up stimulus, but Kuroda added that the Bank would normalize policy if “economic conditions become favorable and our price target is achieved”. Although inflation remains well below target, any further hints at normalization could strengthen the yen.

The US dollar was broadly lower last week, after President Trump sent shock waves through the markets when he announced stiff tariffs on steel and aluminum, in order to protect domestic producers. Under the new scheme, foreign steel will be taxed at 25% and aluminum at 10%. The response to the move was overwhelmingly negative, both abroad and in the US. China and the EU immediately denounced the move. US auto makers and oil and gas producers also condemned the tariffs, saying they could get caught in the middle of a nasty trade war if other countries retaliate. In imposing the tariffs, Trump relied on a provision which allows such measures for national security, but clearly, US trading partners will not quietly accept these protectionist measures.

USD/JPY Fundamentals

Monday (March 5)

  • 9:45 US Final Services PMI. Estimate 55.9
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 58.9. Actual 59.5
  • 13:15 US FOMC Member Randal Quarles Speaks
  • 22:45 Japanese 30-year Bond Auction

*All release times are EST

*Key events are in bold

USD/JPY for Monday, March 5, 2018

USD/JPY March 5 at 11:55 EST

Open: 105.74 High: 105.93 Low: 105.35 Close: 105.96

USD/JPY Technical

S3 S2 S1 R1 R2 R3
103.09 104.32 105.53 106.64 107.29 108.00

USD/JPY edged higher in the Asian session. After little movement in the European session, the has posted gains in North American trade

  • 105.53 was tested earlier in support. It is a weak line
  • 106.64 is the next resistance line

Further levels in both directions:

  • Below: 105.53, 104.32 and 103.09
  • Above: 106.64, 107.29, 108.00 and 109.11
  • Current range: 105.53 to 1.06.64

OANDA’s Open Positions Ratios

In the Monday session, USD/JPY ratio long positions have a majority (70%). This indicative of trader bias towards USD/JPY continuing to head 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.