Currency Analyst since 2010

USD/JPY: forecast for April 18-24

  By Elizabeth Belugina

USD/JPY recovered from 107.60, but met resistance in the 109.75 area. The pair was supported by the improved market’s risk sentiment. Investors’ mood became better as Chinese economic figures weren’t as bad as some had feared, and China is very important for the global economy.

Data released in the United States this week though don’t give any reasons to expect a strong increase in the American currency. US inflation figures came lower than expected and so did retail sales. It means that the possibility of a hawkish message from the Federal Reserve this month isn’t high. Moreover, the possibility of Japanese currency intervention at these levels is low, and this is another negative factor for the pair.    

Next week Japan will release trade balance on Monday and manufacturing PMI and tertiary industry activity on Friday. The market’s risk sentiment will also depend on the outcome of Doha oil summit on Sunday: the event creates negative risk for USD/JPY.  

The trend remains bearish and the pair will likely retest the recent lows. Decline below 107.60 will open the way down to 106.40 (38.2% Fibonacci of 2011-2015 advance). Resistance is at 110.00/10 (September 2014 high). If the bulls manage to get above this level, we will see correction up to 110.75 and 111.50.


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