Currency Analyst since 2010

USD/JPY: forecast for February 8-14

USD/JPY erased gains made after the Bank of Japan’s meeting at the end of January and approached 116.00. Stronger yen was negative for Japanese stocks, which lost about 6% during a week. On Friday US dollar got support of the American labor market data: the unemployment rate declined, while average earnings growth accelerated. Yet, we think that it will now be harder for the pair to regain the upside: the market fears that the BOJ actions to encourage inflation and weaken the yen won’t work.

Note Chinese markets will be closed next week because of the lunar New Year holidays. The market’s risk sentiment can improve, as the People’s Bank of China will probably try to keep the yuan stable. Also watch news out of the US, primarily speeches of the Fed’s Chair Janet Yellen on Wednesday and Thursday. 

Support is at 116.00 (psychological level), 115.50 (bottom of 2015 trading range), 114.80 (100-week MA) and 114.00 (bottom of the weekly Cloud). Resistance is at 118.80 and 120.00. Japanese economic calendar once again is light with only current account on Monday and 30-y bond auction on Tuesday.

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