USD/JPY has edged lower on Thursday, following losses which marked the Wednesday session. In the European session, the pair is trading slightly above the 109 level. On the release front, Japanese bond yields continue to fall, as 30-Year bonds dropped to 0.39% in the April auction.
The yen has been on an impressive run since late March, although USD/JPY has posted gains this week. With the symbolic 100 level within striking distance, the Japanese government has sent out warnings about possible intervention to slow down the yen’s huge appreciation, which has hurt the export sector. Earlier this week, Chief Cabinet Secretary Yoshihide Suga said that although Japan would adhere to the Group of 20’s agreement to avoid competitive devaluations, this did not preclude Japan from intervening against “manipulation of currencies”. The yen has jumped 10 percent in 2016, and despite the tough intervention talk, the upward trend could resume, as the safe-haven yen remains attractive to investors in a turbulent global economy. Despite the yen’s upswing, the currency is widely considered as undervalued against the dollar.
A weak Japanese economy continues to put strong pressure on the Bank of Japan to take additional monetary action. The BoJ cannot be blamed for a lack of effort, as the central bank took radical action in January, adopting negative interest rates for the first time in its history. Despite these moves by the central bank, growth and inflation levels have not improved. If the markets feel that the BoJ has no more monetary easing ammunition left, the yen could continue to strengthen. The next BoJ policy meeting takes place at the end of the month. Will the central bank adopt further easing measures at its meeting or is the monetary tool box empty?
USD/JPY Fundamentals
Wednesday (April 13)
- 23:45 Japanese 30-year Bond Auction. Actual 0.39%
Thursday (April 14)
- 8:30 US CPI. Estimate 0.2%
- 8:30 US Core CPI. Estimate 0.2%
- 8:30 US Unemployment Claims. Estimate 270K
- 8:30 FOMC Member Jerome Powell Speaks
- 8:30 US Natural Gas Storage. Estimate 1B
- 13:01 US 30-year Bond Auction
Upcoming Key Events
Friday (April 15)
- 00:30 Japanese Revised Industrial Production. Estimate -6.2%
- 10:00 US Preliminary UoM Consumer Sentiment. Estimate 91.9
*Key releases are highlighted in bold
*All release times are DST
USD/JPY for Thursday, April 14, 2016
USD/JPY April 14 at 5:50 DST
Open: 109.43 Low: 109.05 High: 109.54 Close: 109.22
USD/JPY Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 106.25 | 107.57 | 108.37 | 109.87 | 110.66 | 111.50 |
- USD/JPY posted small gains in the Asian session but the pair has retracted in the European session
- There is resistance at 109.87
- 108.37 is providing support
- Current range: 108.37 to 109.87
Further levels in both directions:
- Below: 108.37, 107.57, 106.25 and 105.19
- Above: 109.87, 110.66 and 111.50
OANDA’s Open Positions Ratio
USD/JPY ratio has shown little movement on Thursday, consistent with the lack of significant movement from USD/JPY. Long positions command a strong majority (68%), indicative of strong trader bias towards the pair reversing directions and climbing higher.