USD/JPY – Yen edges higher, investors eye BoJ inflation indicator

USD/JPY has started the week with slight gains, erasing the losses seen on Friday. In the North American session, the pair is trading at 109.54, up 0.21% on the day. On the release front, Japanese Services Producer Price Index, which has hovered at 1.1% for four straight months, is expected to tick higher to 1.2%. On Tuesday, Japan releases BoJ Core CPI, which is the bank’s preferred inflation index. The indicator gained 0.5% in the previous release. In the U.S., the key release is CB Consumer Confidence.

The Japanese yen thrives off high risk apprehension and the spike in trade tensions have boosted the safe-haven currency in recent weeks. USD/JPY has slipped 1.7% in the month of May. On Thursday, the yen improved by 0.68%, its strongest gain since late March. Trade tensions between the U.S. and China have escalated, and a trade deal between the two super-economies has not materialized, despite assurances from U.S. officials that substantial progress has been made. China has reacted angrily to U.S. sanctions on Huawei and has suspended trade talks with the U.S. Investors remain nervous about the U.S.-China conflict and the weak global economy, which bodes well for the yen.

U.S. indicators ended the week on a disappointing note, as April durable goods orders were softer than expected. Durable goods orders slumped 2.1%, just below the estimate of -2.0%. This marked the sharpest decline since January 2018. The core reading slowed to 0.0%, down from 0.4% a month earlier. The U.S. economy has been performing well, and the economy will receive a report card on Thursday, with the release of Preliminary GDP for the first quarter, which is expected to post a strong gain of 3.1%. The initial GDP reading showed a gain of 3.2%, crushing the estimate of 2.2%. Will the revised release also beat expectations? If so, traders can expect the U.S. dollar to post broad gains.

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USD/JPY Fundamentals

Monday (May 27)

  • 19:50 Japanese SPPI. Estimate 1.2%

Tuesday (May 28)

  • 1:00 Japanese BoJ Core CPI
  • 10:00 US CB Consumer Confidence. Estimate 130.1

*All release times are DST

*Key events are in bold

USD/JPY for Monday, May 27, 2019

USD/JPY May 27 at 12:00 DST

Open: 109.30 High: 109.59 Low: 109.28 Close: 109.54

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.10 108.70 109.35 110.40 111.15 112.40

USD/JPY edged higher in Asian trade and showed limited movement in the European session. The pair is steady in North American trade

  • 109.35 has switched to support after gains by USD/JPY on Monday. It is a weak line
  • 110.40 is the next resistance line
  • Current range: 109.35 to 110.40

Further levels in both directions:

  • Below: 109.35, 108.70, 108.10 and 107.50
  • Above: 110.40, 111.15 and 112.40

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.