Currency Analyst since 2010

USD/JPY: outlook for Sep. 12-18

Traders continue trying to guess whether the Bank of Japan will add to its aggressive monetary stimulus. So far the representatives of Japanese monetary authorities spoke much about the necessity of further monetary easing, but gave no hints that the BOJ will act this month. The lack of strong hints on easing limits USD/JPY on the upside.

Japanese core machinery orders, the leading indicator of capital spending, rose by 4.9% in July, though a decline was expected. Other data releases from Japan this week include BSI manufacturing index on Tuesday and revised industrial production on Wednesday. The most important events for USD/JPY will be in the US economic calendar. Also pay attention to China’s industrial production due on Tuesday – the release will be important for the market’s risk sentiment. Better Chinese figures increase investors’ appetite for risk and decrease demand for the yen and vice versa. Monday started with risk aversion for investors and lower USD/JPY because of lower stocks.

USD/JPY keeps trading below 2016 resistance line. Still the pair managed to close last week significantly above the minimums. Support is located at 101.20 ahead of 99.75. Resistance lies at 103.65 (bottom of the daily Ichimoku Cloud, trend line resistance) ahead of 104.15. These levels should be attractive for short positions. 

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