FBS: weekly USD/JPY review
In common with EUR/USD, this week USD/JPY lacked a clear direction. The pair opened the week with a gap up, strengthening to 100.60 yen on Syria tensions easing, but later on slipped back below the 100.00 mark. Market is very sensitive to all the news from the US, trying to guess the terms and amounts of the expected QE tapering in autumn.
USD/JPY remains supported after having broken above the triangle in early September. However, as can be seen from the monthly chart, the bulls couldn’t fix above from the bearish Ichimoku cloud (top at 100.20). We remain bullish on the pair: break above the 100.00 mark would open the way to 100. 60 and to 101.50. A slide below 98.50 would put the bullish prospects under question.
The central event of the next week is surely the FOMC meeting the results of which will be announced on Wednesday. US central bank is expected to reduce bond purchase program. For now the market’s pricing in a $10B decline in QE. In case of a bigger cut in quantitative easing USD/JPY will gain. If, however, the Federal Reserve decides to prolong QE, the greenback will get hurt. Right after the Fed, the lead will be taken by the Bank of Japan’s governor Kuroda who’s due to speak on Thursday (economic calendar is available here: http://www.fxbazooka.com/en/calendar).
Chart. Daily USD/JPY