The week that passed was an undecided one for USDJPY; the quotation had a fluctuating path and closed the week almost at the same level it started. Monday and Tuesday, the bulls took the price around 102.80 so that Wednesday the bears to take control and push it down to 102.00. A better than expected NFP sent USDJPY sky rocketing towards 103.00 and beyond, but at the end of the day the quotation stabilized at 102.22.
On the macroeconomic side, the Japanese economy still sends mixed signals as the Manufacturing PMI and the Preliminary Industrial Production had a worse publication than last month while the Household Spending Indicator beat the expectations with a growth of 7.2%. Regarding BoJ Press Conference, the confidence Bank of Japan officials are showing in achieving their inflation target is lowering the chances of additional monetary easing this year even as the economy weakens.
On American soil we had another 10 billion dollars reduction of the QE program and the Federal Reserve said it will keep reducing the pace of bond purchases as the economy shakes off the winter hiccups, putting the central bank on a course to end the unprecedented stimulus program by the close of 2014.
Monetary Policy Meeting Minutes (0:50 GMT)-Wednesday. It is a detailed record of the BoJ Policy Board’s meeting that provides in-depth insights into the economic conditions which influenced their decision on where to set interest rates. The frequency is variable, about 14 times per year. A more hawkish tone than expected it is good for the currency.
10-y Bond Auction (4:45 GMT)-Thursday. The average yield on the 10 year bonds that government sell at this auction continued to be on a run. This month it isn’t expected any big change.
Leading Indicators (06:00 GMT)-Friday. It represents a level of a composite index based on 11 economic indicators that is released monthly, about 35 days after the month ends. This index is designed to predict the direction of the economy, but it tends to have a muted impact because most of the indicators used in the calculation are released previously.
Support: 101.90, 101.10
Resistance: 103.00, 104.00
USDJPY continues the movement from the past 2 weeks and a half between the support level from 102.00 and the resistance line from 103.00, having a fluctuating path. On the daily chart we still have some potential for a symmetrical triangle. The price had a spike Friday and was rejected from the 103.00 resistance level, failing to touch the superior line of the pattern. The MACD Histogram looks very calm and could be the silence before the storm which could be translated as the sideways movement before the upwards breakout.
Support: 101.90, 101.40
Resistance: 103.00, 104.00
The price action on the hourly timeframe is a slightly ascending channel bounded by the resistance from 103.00 level and the support from 101.90. Hence, breakouts above or below these levels are crucial on short term and can set the direction for the respective trading session. The MACD Histogram shows us how the bears were unstoppable Friday in the end of the trading day and we could expect Monday to a recovery from the bulls who may push the price up.
Bullish or Bearish
This week is kind of poor in Japanese macroeconomic publications, so I expect that the price action to be driven by what it will happen in the United States and also how the situation from Ukraine it will work out. If the conflict does not get much more acute than it is in this moment, I have a moderately bullish sentiment on USDJPY for the week to come.