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USD/JPY: Yen Gains Ground After FOMC Minutes

By Market Pulse (Kenny Fisher)ForexJan 10, 2019 02:18PM ET
www.investing.com/analysis/usdjpy-yen-gains-ground-after-fomc-minutes-200374550
USD/JPY: Yen Gains Ground After FOMC Minutes
By Market Pulse (Kenny Fisher)   |  Jan 10, 2019 02:18PM ET
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USD/JPY has posted considerable losses on Thursday. In the North American session, USD/JPY is trading at 108.25, up 0.09% on the day. In economic news, unemployment claims dropped sharply to 216 thousand, below the forecast of 226 thousand. In Japan, household spending is expected to improve to 0.0% after two straight declines. As well, the current account surplus, which has dropped for six straight months, is expected to narrow to JPY 1.10 trillion. On Friday, the U.S. releases CPI and Core CPI, which should be treated as market-movers.

The U.S. dollar’s retreat continued on Wednesday, after the release of the FOMC minutes of the December meeting. At the meeting, the Fed raised rates for a fourth time in 2018, culminating a very aggressive stance. This was reflected in the rate statement, but then came the thumbs-down from investors, who wanted a more dovish approach, and sent the equity markets into a tailspin. Fed policymakers have since made a sharp U-turn and are sounding much more cautious about future rate hikes. The minutes noted low inflation meant that the Fed can “afford to be patient about further policy firming”. Even more striking, the minutes revealed that at the December meeting, some policymakers opposed a rate hike, arguing that inflation was too low to warrant higher rates. The new dovish stance from the Fed has relieved investors and helped stabilize the stock markets, but has led to broad losses for the U.S. dollar.

Turmoil in the equity markets in recent weeks has been a boon for the Japanese currency, as jittery investors have snapped up the safe-haven currency. The yen climbed 3.4% in December and has added another 1.2% in January, capitalizing on the market plunge last week, after Apple (NASDAQ:AAPL) stunned investors by lowering its sales forecast. Even though risk appetite has improved since then, the yen has held on to these gains. Will the rally continue? There appears more upside potential for the yen, as USD/JPY tested the 105 line last week, for the time since March 2018.

USD/JPY Fundamentals

Thursday (January 10)

Friday (January 11)

*All release times are EST

*Key events are in bold

USD/JPY for Thursday, January 10, 2019

USD/JPY
USD/JPY

USD/JPY January 9 at 11:25 EST

Open: 108.16 High: 108.30 Low: 107.77 Close: 108.25

USD/JPY Technicals

S3 S2 S1 R1 R2 R3
105.66 106.88 108.11 109.37 110.28 110.95

USD/JPY posted small losses in the Asian session and showed limited movement in European trade. The pair has recorded small gains in the North American session

  • 108.11 was tested earlier in support. It remains a weak line
  • 109.37 is the next resistance line
  • Current range: 108.11 to 109.37

Further levels in both directions:

  • Below: 108.11, 106.88, 105.66 and 104.64
  • Above: 109.37, 110.28 and 110.95

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USD/JPY: Yen Gains Ground After FOMC Minutes
 

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USD/JPY: Yen Gains Ground After FOMC Minutes

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