USD/JPY – Yen Under Pressure, Markets Await Key US reports

The Japanese yen has posted slight gains on Wednesday. Early in the North American session, the yen is trading at 106.60. There are no Japanese events on Wednesday. It’s another quiet day in the US, with only one event on the schedule. Crude Oil Inventories is expected to show another decline, with a forecast of -1.3 million. On Thursday, the US will release Unemployment Claims as well as manufacturing and housing data.

The yen continues to struggle, having lost some 6 percent since July 11. The yen finds itself at levels not seen since the Brexit vote in late June. Fresh from a convincing election week earlier in July, the Abe government is busy working on a fiscal spending package. The Bank of Japan meets for a policy meeting in late July and could adopt new monetary measures which would further weaken the currency.

Central banks remain in the spotlight. Last week, the BoE surprised the markets and held off from lowering rates. Will the ECB make a move at its policy meeting on Thursday? The ECB is under pressure to adopt further monetary easing, but the markets are not expecting a rate cut from the current rate of 0.00%. Still, a dovish rate statement or any hints about further easing from Mario Draghi could push the euro downwards. The situation has become further complicated with the recent Brexit vote, as Britain, the second largest economy in Europe, will be soon be waving goodbye to the EU. This move (and the negotiations preceding it) are bound to have profound economic ramifications on both Britain and the EU, and could result in significant volatility in the currency markets.

USD/JPY Fundamentals

Wednesday (July 20)

  • 10:30 US Crude Oil Inventories. Estimate -1.3M

Upcoming Key Releases

Thursday (July 21)

  • 8:30 US Philly Fed Manufacturing Index. Estimate 5.1
  • 8:30 US Unemployment Claims. Estimate 271K
  • 10:00 US Existing Home Sales. Estimate 5.48M

*Key events are in bold

*All release times are EDT

USD/JPY for Wednesday, July 20, 2016

USD/JPY July 20 at 8:35 EDT

Open: 106.11 High: 106.71  Low: 105.82 Close: 106.62

USD/JPY Technical

S3 S2 S1 R1 R2 R3
103.73 104.99 105.87 106.81 107.65 108.61
  • USD/JPY showed limited movement in the Asian session and has posted slight gains in European trade
  • 106.81 is a weak resistance line and could break in the North American session
  • 105.87 was tested earlier in support
  • Current range: 105.87 to 106.81

Further levels in both directions:

  • Below: 105.87, 104.99, 103.73 and 102.36
  •  Above: 106.81, 107.65 and 108.61

OANDA’s Open Positions Ratio

The USD/JPY ratio is showing slight gains in short positions. Currently, long positions have a majority (55%), indicative of trader bias towards USD/JPY continuing to move 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

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.