USDJPY had a downfall last week amid a selloff of the US dollar, pushing the quote again towards the 101.00 level. Even though the macro indicators from the Nippon economy were weak, the most important one, current account, managed to stabilize around a deficit of -0.04T which was the forecasted value, giving some force to the bullish investors. The event that basically led to the selloff of the US dollar and made the price to break the 103 support line was the BoJ Monetary Policy Statement and Press Conference.
Governor Kuroda left the monetary stimulus untouched and did not hint to any further additional one for the next period. Also, last week we had some intensification of the US-Russia conflict that helped safe haven assets to soar, which of course benefited the Japanese yen. The week finished in a rosy tone for the US dollar and we will see in the following paragraphs if the USDJPY can stage a comeback next week.
Revised Industrial Production m/m (5:30 GMT)-Wednesday. This is the second version of the indicator and it has a low impact as the preliminary release is the earliest and thus tends to have the most impact on the markets. It measures the change in the total inflation-adjusted value of output produced by the manufacturers, mines and utilities. It is forecasted to have a fall of 2.3% for April.
BoJ Governor Kuroda Speaks (1:30 GMT)-Thursday. He is due to speak at the Branch Managers Meeting in Tokyo. It is important to keep an eye on his speeches as volatility is often experienced during them as traders attempt to decipher interest rates clues.
Consumer Confidence (06:00 GMT)-Thursday. This indicator is an index based on surveyed households, excluding single-person homes. It is important to watch it as financial confidence is a leading indicator of consumer spending, which account for a majority of overall economic activity. This month it is expected to rise from 38.3 to 40.2
Tertiary Industry Activity m/m (0:50 GMT)-Friday. This one is a medium impact indicator and measures the change in the total value of services purchased by businesses. It is also a leading indicator of economic health. For April it is forecasted a reduction from 0.9% to 0.2%, so it will be interesting to follow its publication because it can create some volatility.
Support: 101.25, 100.70, 100.00
Resistance: 102.15, 103.00, 104.00
The daily view of the USDJPY chart still paints a pretty undecided image. We can see up and downs for the last two months, but the ups are getting more powerful in intensity than the downs. Last week also finished in the uncertainty mode if we look at the daily candlestick, but was a victory for the US dollar as the quotation was rejected by the support line from 101.25. The MACD Histogram presents an increase in the power of bears while Friday the bulls won the battle. Hence, it is a sort of a disconnection here which could hint towards a continuation of the selloff. Let’s go now to the hourly chart to see what it tells us.
Support: 101.25, 100.70
Resistance: 102.15, 103.00
On the H1 chart there is drawn a reversal price pattern called falling wedge. After the abrupt downfall from Tuesday, the price managed to stabilize and to form the pattern mentioned. The MACD Histogram is like the silence before storm, so you should pay attention if the price make a breakout above the superior line of the falling wedge and closes as well beyond 101.70, because this could mean that the price could retest the resistance line from 102.15.
Bullish or Bearish
Overall, there are big chances to see a bullish movement for the USDJPY next week and the price to move again above the 102.00 level as the US dollar was seriously hit last week and a retracement is very likely. On the other hand, we should not underestimate a potential re-escalation of the US-Russia conflict that could give strength to the Japanese yen and other safe haven assets, so a moderately bullish outlook is the best way to approach the markets next week.