USD/JPY – Japanese yen edges lower, inflation report next

The Japanese yen has posted slight gains in the Wednesday session. In the North American session, USD/JPY is trading at 110.97, down 0.21% on the day. On the release front, U.S New Home Sales dropped sharply to 631 thousand, well off the estimate of 669 thousand. This marked a 4-month low. Later in the day, Japan releases SPPI, which is expected to remain unchanged at 1.0%.

Recent trade tensions between the U.S and its trading partners have shaken investors worldwide, but the safe-haven Japanese yen has not reaped the benefits of nervous market sentiment. Investors are not rushing to buy Japanese assets at a time when Japanese interest rates remain close to zero. At the same time, if the tariff battle intensifies and the Trump administration makes good on its threats to impose further tariffs, we could see a move investors head for the safety of the Japanese currency.

The yen has posted slight gains this week and touched a 2-week high in response to a report that the Bank of Japan was considering changes to its monetary policy, in particular, its interest rate targets. This has raised speculation that the Bank could be making plans to reduce its massive stimulus program. Japan’s 10-year yield climbed to 5-month high on Monday in response to the report. If there are further signals from the BoJ that policymakers are considering reducing stimulus, the yen could move higher.

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Wednesday (July 25)

  • 10:00 US New Home Sales. Estimate 669K. Actual 631K
  • 10:30 US Crude Oil Inventories. Estimate -2.6M. Actual -6.1M
  • 19:50 Japanese SPPI. Estimate 1.0%

Thursday (July 26)

  • 8:30 US Core Durable Goods Orders. Estimate 0.5%
  • 8:30 US Durable Goods Orders. Estimate 3.0%
  • 8:30 US Unemployment Claims. Estimate 215K
  • 19:30 Tokyo Core CPI. Estimate 0.7%

*All release times are DST

*Key events are in bold

 

USD/JPY for Wednesday, July 25, 2018

USD/JPY July 25 at 11:45 DST

Open: 111.20 High: 111.38 Low: 110.82 Close: 110.97

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.11 109.21 110.21 111.22 112.30 113.75

USD/JPY ticked higher in the Asian session but reversed directions and edged lower in the European session. The pair has posted small losses in North American trade

  • 110.21 is providing support
  • 111.22 was tested earlier in resistance and is a weak line

Further levels in both directions:

  • Below: 110.21 and 109.21 and 108.11
  • Above: 111.22, 112.30, 113.75, 114.73 and 115.51
  • Current range: 110.21 to 111.22

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.