USD/JPY – Surging Dollar Pushes Past 111

USD/JPY is almost unchanged on Monday, as the pair has paused following sharp gains on Friday. In the European session, USD/JPY is trading at 111.20. On the release front, it’s a quiet start to the week. Japanese SPPI, which measures inflation in the corporate sector, posted a small gain of 0.2%, which matched expectations. In the US, today’s only event is New Home Sales. The markets are expecting an improvement in the March report, with an estimate of 521 thousand. On Tuesday, the US releases two major events – Core Durable Goods Orders and CB Consumer Confidence.

It was Black Friday for the yen, as the week ended with USD/JPY jumping 230 points and coming close to the 112 line. This marked the pair’s highest level since early April. There is strong sentiment that the Bank of Japan, which meets for its monthly policy meeting on Wednesday, could implement further stimulus measures in order to kick-start the weak Japanese economy. In January, the central bank shocked the markets when it adopted negative interest rates for the first time, but this step has not bolstered inflation or led to increased economic growth. If the BoJ opts to further cut interest rates, the yen could continue to lose ground.

The US labor market continues to impress, as the weekly unemployment claims indicator fell to 247 thousand, well below the forecast of 265 thousand. This was the lowest weekly count since November 1973, and the four-week indicator, which is considered more accurate, also dropped compared to the previous release. The good news was tempered by a disappointing key manufacturing report. The Philly Fed Manufacturing Index surprised the markets with a decline of -1.6 points, as the estimate stood at 8.1 points. This reading marked the third decline in four readings, as the manufacturing sector remains a weak area of the US economy. Uncertainty in global economic conditions has lead to weaker demand for US goods and put the squeeze on domestic manufacturers. On Friday, Flash Manufacturing PMI dipped to 50.8 points, shy of the forecast of 51.9 points. Although the reading did point to a slight improvement in manufacturing business conditions, it marked the PMI’s weakest release since September 2009.

USD/JPY Fundamentals

Sunday (April 24)

  • 19:50 Japanese SPPI. Estimate 0.2%. Actual 0.2%

Monday (April 25)

  • 10:00 US New Home Sales. 521K

Tuesday (April 26)

  • 18:30 US Core Durable Goods Orders. Estimate 0.6%
  • 10:00 US CB Consumer Confidence. Estimate 95.8 points

*Key releases are highlighted in bold

*All release times are EDT

USD/JPY for Monday, April 25, 2016

USD/JPY April 25 at 6:15 EDT

Open: 111.45 Low: 111.03 High: 111.48 Close: 111.20

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.37 109.87 110.66 111.50 112.41 113.51
  • USD/JPY has shown limited movement in Asian and European sessions
  • 110.66 is providing support
  • 111.50 is under strong pressure in resistance and could break during the day
  • Current range: 110.66 to 111.50

Further levels in both directions:

  • Below: 110.66, 109.87, 108.37 and 107.57
  •  Above: 111.50, 112.41 and 113.51

OANDA’s Open Positions Ratio

USD/JPY ratio has showed movement towards short positions, consistent with Friday’s sharp gains by USD/JPY, which resulted in the covering of long positions. Long positions command a strong majority (62%), indicative of strong trader bias towards the pair resuming its upward move.

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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.