USD/JPY – Japanese Yen Dips, Inflation Reports Next

USD/JPY has posted gains in the Monday session. In the North American session, USD/JPY is trading at 104.97, up 0.22% on the day. It’s a quiet start to the week, with no US data releases. We’ll hear from three FOMC members – William Dudley, Loretta Mester and Randal Quarles. Japan will release an inflation indicator, the Services Producer Price Index. This inflation indicator is expected to remain unchanged at 0.7%. On Tuesday, the Bank of Japan releases Core CPI and the US publishes CB Consumer Confidence.

US durable goods reports ended the week on a high note, but the dollar still lost ground on Friday. Core Durable Goods Orders rebounded with a strong gain of 1.2%, crushing the estimate of 0.5%. This marked the strongest gain since July 2016. Durable Goods Orders jumped to an 8-month high, with a gain of 3.1%. The reading easily beat the forecast of 1.6%. The US manufacturing sector continues to expand at an impressive clip, a result of stronger global growth and a cheaper US dollar, which makes US goods less expensive for foreign buyers.

The safe haven yen gained 1.2% last week and hit 5-month highs, as risk appetite sagged after US President Trump slapped tariffs on China on Thursday. The punitive measure could affect up to $60 billion worth of Chinese imports. Trump said that the tariffs are needed to address the massive trade deficit with China, which stands at $375 billion. For its part, China wasted no time in threatening to retaliate, saying it was planning to impose tariffs on 128 US products, which would amount to $3 billion in imports. The tariffs directed against China come on the heels of tariffs on steel imports coming into the US, although the US has promised exemptions to the EU and other trading partners. There is serious concern that these moves could ignite a global trade war, and if the US tariffs remain in place, as downturn in the Chinese economy could spread and possibly a global recession.

USD/JPY Fundamentals

Monday (March 26)

  • 12:30 US FOMC Member William Dudley Speaks
  • 16:30 US FOMC Member Loretta Mester Speaks
  • 19:10 US FOMC Member Randal Quarles Speaks
  • 19:50 Japanese Services Producer Price Index. Estimate 0.7%

 Tuesday (March 27)

  • 1:00 Bank of Japan Core CPI. Estimate 0.7%
  • 9:00 US S&P/CS Composite-20 HPI. Estimate 6.1%
  • 10:00 US CB Consumer Confidence. Estimate 131.2
  • 10:00 US Richmond Manufacturing Index. Estimate 23
  • 11:00 US FOMC Raphael Bostic Speaks

*All release times are EST

*Key events are in bold

USD/JPY for Monday, March 26, 2018

USD/JPY March 26 at 11:35 EST

Open: 104.74 High: 105.26 Low: 104.64 Close: 104.97

USD/JPY Technical

S3 S2 S1 R1 R2 R3
101.84 103.09 104.32 105.53 106.64 107.29

USD/JPY ticked higher in the Asian session. The pair showed little movement in the European session and has posted small gains in North American trade

  • 104.32 is providing support
  • 105.53 is the next resistance line

Further levels in both directions:

  • Below: 104.32, 103.09 and 101.84
  • Above: 105.53, 106.64, 107.29 and  108.00
  • Current range: 104.32 to 105.53

OANDA’s Open Positions Ratios

In the Monday session, USD/JPY ratio is showing long positions with a majority (68%). This is indicative of trader bias towards USD/JPY continuing to head to higher ground.

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.