USD/JPY: forecast for November 16-22
USD/JPY corrected down from 123.60 to the 122.50 area. Demand for Japanese yen as a safe haven increased after Chinese data this week renewed concerns about the global economy. On such background the approaching US rate hike will make investors even more worried. Still, the US has a bond yield advantage over Japan, and this will provide the greenback with fundamental support.
Next week pay attention to the release of Japan’s GDP on Monday. The odds are that the Japanese economy will keep contracting in Q3 after declining in Q2. The data release will be followed by the Bank of Japan’s meeting on Thursday. Although the market generally does not expect the Bank of Japan to add monetary stimulus at this time, weak economic figures leave this option on the table. This is another factor to limit the decline of USD and Japanese Yen.
The current decline in USD/JPY looks like a correction. Support is at 122.00, 121.50 and 121.00. Resistance is at 123.00, 123.60 and 124.30. Pay attention to the US data as well: if the readings aren’t very bright, then the pair will be in no hurry to move up.