USD/JPY: forecast for January 18-24
The Bank of Japan once again pointed out that for now it is not planning to ease monetary policy, though it will do so in case of the risk that inflation won’t reach the target level. Thus, the prospect of decline in the BOJ’s inflation forecast at the end of January will limit advance of Japanese yen.
Decline of USD/JPY has slowed down, and it tried to base above 117.00. At the same time, to form an interim bottom the pair needs to break above resistance at 118.30 and even 118.70. In case of the bullish scenario, the targets of an upward correction will lie at 119.60/120.00. The next support is at 116.50 (support line) and 116.15 (August 2015 low). If the pair falls to the 116.00 area in the next 2 weeks, we’ll see it as a medium-/long-term buying opportunity.
Japan’s economic calendar for the next week includes data of lower importance such as revised industrial production and tertiary industry activity on Monday and manufacturing PMI on Friday. The pair will be driven mainly by the market’s risk sentiment, so watch Chinese GDP and industrial production release on Tuesday. Lower readings will make USD/JPY fall. US data releases, which will peak on Wednesday, are also important.