USD/JPY – Japanese yen unchanged as investors search for cues

USD/JPY continues to show little movement this week. In Tuesday’s North American session, the pair is trading at 110.63, up 0.03% on the day. On the release front, there are no major events out of the United States. Japan is expected to post a trade surplus after recording six successive deficits. On Wednesday, the FOMC releases the minutes of its January policy meeting.

China is Japan’s biggest trading partner, so it’s no surprise that the slowdown in China is having a negative impact on the Japanese economy. The manufacturing and export sectors are particularly vulnerable, with Japan exporting car parts and electronics to China. This has resulted in a string of monthly trade deficits, as the global trade war has dampened the appetite for Japanese exports. There was positive news last week, as Japan’s economy grew 0.3% in the fourth quarter, after a decline of 0.6% in the third quarter. Business and consumer spending improved, helping the economy expand. Exports rose 0.9% in Q4, the strongest growth in a year. However, if the global trade war continues, Japanese growth could dramatically fall.

Traders should treat the Federal Reserve minutes as a market-mover. Since raising rates in December, the Fed has changed direction and become much more dovish. In late 2018, there was talk of up to four rate hikes in 2019, but the Fed has revised its forecast to two hikes. The markets have gone further, projecting no rate increases this year, and there has even been talk of a rate cut in late 2019. In the January rate statement, the Fed discarded previous pledges of “further gradual increases” in interest rates, and said it would be “patient” before any further hikes.

Dollar in no man’s land

USD/JPY Fundamentals

Tuesday (February 19)

  • 10:00 US NAHB Housing Market. Estimate 59. Actual 62
  • 18:50 Japanese Trade Balance. Estimate 0.17T

Wednesday (February 20)

  • 14:00 US FOMC Meeting Minutes

*All release times are EST

*Key events are in bold

USD/JPY for Tuesday, February 19, 2019

USD/JPY February 19 at 10:50 EST

Open: 110.61 High: 111.83 Low: 110.45 Close: 110.63

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.11 109.37 110.28 110.90 112.16 112.93

In the Asian session, USD/JPY ticked lower but reversed directions and gained ground. The pair inched higher in the European session and is showing limited movement in North American trade

  • 110.28 is providing support
  • 110.90 is a weak resistance line
  • Current range: 110.28 to 110.90

Further levels in both directions:

  • Below: 110.28, 109.37, 108.11 and 107.36
  • Above: 110.90, 112.16 and 112.93

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.