USD | JPY is traded with a slight increase, which is a technical correction after a long decline. It is possible that in the morning growth of pair will continue because of low volume of trading and lack of holidays in many countries.
Technical analysis shows that after a long time the price can grow up to 111.80 (50% of the downward movement), after that the decline will resume. But America should stop lowering interest rates for such a strong growth. Examining the fundamental analysis in the United States a few more downwards are possible, so this growth is not expected soon.
If we consider this correction of the pair as a temporary and expect further decline, taking into account the movement of the past two months, at the end of March closing price is expected at 99.50 (see chart). Thus, the price has already reached the point at which it will be closed at the end of the month.
Examining technical analysis, sideward trend can be expected for pair USD | JPY before the end of this month. Intermediate support of the price is at around $ 97, and an intermediate resistance is at 104,20 (closure of the previous maximum)
USD has completed the consolidation on Thursday (which is a technical correction) after a long decline. However, despite long decline and the high rate of other currencies against the dollar, it is expected that USD will continue to decline for some time. Inflationary data in the United States remains modest, which allow the discount rate cut to 2% as minimum for the maintenance of growth, but in the future this step will cause hyper-inflation, for deterrence of whitch it will be necessary to raise rates quickly up to 10%.
For financial markets today is not of interest, as most of the countries celebrate Good Friday, which will result in lack of news.
USD
Today USD was in the consolidation. After intensive decline on Wednesday, against a background of low optimism of American consumers, today’s consolidation was caused by relatively good data on the rate of growth of GDP for the 4th quarter of last year, which amounted to 0.6% against expected and similar value in the previous quarter.
Data are powerful and disturbing signals. Perhaps all the rumors of a recession, which should be accompanied by a fall in growth rates and inflation, are slightly exaggerated. Despite the crisis in the housing market and the banks there is a high probability that the slowdown in the United States will not be as significant as earlier predicted, and the American economy will be able to go out of the recession faster than it is expected.
Now the focus of the market will be on U.S. GDP data, industrial manufacturing and inflation component. If there is no burst of inflation in the nearest future and industry shows stability, we can expect a completion of recession, and then there will be strengthening of the American currency, meaning a three-year cycle of its strengthening.
On Friday, there will be no significant data on the American economy; therefore, most likely the personal income and personal spending, volume of trades will not be high and will be mainly in the side direction. Among the Friday data the personal income and expenses will attract attention but most likely they will not have a noticeable impact.
JPY
JPY is traded with decreasing against USD. After rapid consolidation of the Japanese currency, the growth of USD | JPY is a technical correction.
It is still expected that in the midterm outlook value of the pair will grow up to 111.80 (three-year closing cycle), and then opening of short positions on the pair with target of 2-3 years are recommended.
After a strong correction caused by the strengthening of the American currency, which is expected to happen in the middle of the second -third quarter, it is possible expect a raise of interest rate by Bank of Japan that will open the long term strengthening of JPY. It is possible that when the growth cycle of JPY ends in a few years, we will see USD/JPY rate near 80 yen pre one dollar.
In the current conditions the strongest resistance level of the pair will be 111.80 (closure of the second 3-year cycle) coincided with 50 % from downward movement of prices (see chart) in the area of which it is expected to make a turnout.
In the short run, a pair may slightly fall, which will be caused by the weakness of the American currency, but once this weakness comes to nothing, we will see the reverse process.
Among the data, it is worth paying attention to the core consumer price index for the country, as well as retail sales. Inflationary component in Japan for will remain at a low level for a long time, which is restraining Bank of Japan from raising interest rates, but retail sales in the current economic conditions reflect consumer confidence, which many people are paying more attention on.
JPY is bullish after publication of preliminary data on Prelim GDP which showed that in first quarter of this year growth rates makes up 0.8%.
In year calculus growth rates are higher than it was predicted and makes up 3,3% against previous value of 3,5% and forecast of 2,5%
The data show that for Japan the first quarter have passed not so successful, therefore increase of interest rates is less possible at present. Most likely the question about increase of interest rates will arise in the end of second quarter when the economy is able to recover from slowdown of demand of the US and Japan gets stronger inflationary pressure caused by rise in oil and food prices.
USD/JPY is bearish. The price could not break the resistance level formed by local maximums and technical turnout took place. It is expected that this level will be broken soon which is due to strengthening of USD.
In the case of turnout it is recommended to open long positions with target on 106.5. It is expected to be come up soon.
The demand for foreign bonds by the Japanese investors is hurting the yen. Right now, the pair is trading at 96.592 yens per dollar.
Focus on the resistance at 96.65. If broken, the new target would be 97.00. Despite that, if the trend reverts, the next supports are at 96.49 and 95.90 yens per dollar.
I would just like to ask, why does it seem that when risk aversion emerges, the USD loses its ground with the JPY? Whereas if it was the EUR or the GBP, it manages to appreciate…
Does it mean that the JPY is much safer than the USD?
USD/JPY’s break of 94.81 minor resistance suggests that retreat from
95.37 has completed and flips intraday bias back to the upside. Break
of 95.37 will target 100% projection of 91.73 to 94.78 from 93.07 at
96.12 next. On the downside, below 94.01 will indicate that more
consolidation would be seen but after all, short term outlook remains
bullish as long as 93.07 support holds and rise from 91.73 is still in
favor to extend. However, note that break of 93.07 will indicate that
rebound from 91.73 has completed and will turn bias back to the
downside for retesting this low.[actionforex]
well well in summary, the usd have been very bearish! to give the gbp/jpy a rise of 600 pips!
interest rate stayed unchanged, maybe the trade balance 2morrow will help it regain some ground
the Japanese government has interest in keeping its currency low, and so the interest rate 0.10% for epxort reasons, even though lately the jpy have shown some volatility remember that!
jpy weak in front of the gbp and eur, but strong against the aud and nzd!
Plus the prime ministre announced the strenght or at least the evolution of its economy, which may give a boost to the currency
We see a downtrend. Since last week the situation has not changed. The price has hit strong reversal level 2/8 and now it is very likely to reach level 0/8, because on the way to this level the price has only weak local reversal level 1/8.
USD/JPY DAY
It is a downtrend. On the way to target T1 there are no strong reversal levels from senior time frames (let us say that T1 coincides with level 2/8), therefore the price is very likely to reach level T1 after moving into the lower trading range.
USD/JPY 240
We see an uptrend, on the way to target T1 there are no strong resistance levels which are significant on senior time frames, only local levels 6/8 and 7/8. There is a good chance of the price reaching target T1 or even target M.
