Currency Analyst since 2010

USD/JPY: outlook for July 18-24

It was a week of a 5% correction to the upside in USD/JPY: the pair rose to 106.30 showing the biggest weekly gain since 1999. Yen weakened for 2 reasons. Firstly, former Federal Reserve Chairman Ben Bernanke met with Japanese authorities fueling speculation that the Bank of Japan might provide "helicopter money", which would involve the central bank directly financing government spending.

Secondly, the market’s risk sentiment improved, and demand for Japanese yen as a safe haven currency declined. Britain managed to restore political stability as Theresa May became new Prime Minister, while Chinese data eased some concerns about the nation’s economic slowdown: latest growth, industrial output and retail sales figures exceeded forecasts.

Next week there will be few economic data releases in both the US and Japan, so the fundamental picture probably won’t change much.  

Above 106.60 (200-week MA, downtrend resistance line) resistance is at 107.60 (April 4 lows), 108.60 (100-day MA) ahead of 110.00 (psychological level). Support is at 103.80 and 102.70.  

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