Currency Analyst since 2010

USD/JPY: forecast for September 14-20

By Elizabeth Belugina

Japanese yen has weakened versus the US currency in the past week because of the expectations of the Bank of Japan’s additional monetary policy easing. These expectations revived as the adviser to Japanese premier Shinzo Abe said that the central bank’s October meeting presents a “good opportunity” for further quantitative easing (QE). Such comments hit the markers, which were worried because of the recent weak Japan’s economic figures and the volatility in stocks.

For now, the Bank of Japan’s Governor Kuroda stubbornly sticks to the positive view on Japan’s economic prospects underlining that the regulator’s policy is loose enough. Next week we will hear from Kuroda on Tuesday at the Bank of Japan’s press conference and on Thursday when he is due to make a speech. Still, as the comments of Japanese central bank come before the meeting of the US Federal Reserve, we do not think that the position of Japanese regulator may seriously change. So, we believe that the Bank of Japan’s Tuesday meeting will not seriously affect the market.

Note that during the most part of the upcoming trading week players will be in the situation of the uncertainty trying to foresee whether the Fed announces a rate hike on Thursday or not. Another source of uncertainty is China, which will publish industrial production data on Sunday, September 13. This uncertainty will limit USD/JPY on the upside.

USD/JPY may consolidate in the 120.70/119.00 area ahead of the Fed. On the upside, further resistance lies at 121.70, 122.00 and 122.50. On the downside, further support is at 118.30/00 and in the 116.00 zone. 


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