USDJPY Weekly Forex Forecast – 24th to 28th Sept 2018
Fundamentals Outlook
The week ahead is expected to be relatively quiet for the most part. Data from the Eurozone will cover second tier data. German Ifo business climate will shed light on the business conditions for the Eurozone’s largest economy. In the U.S. the Federal Reserve’s monetary policy meeting will be the main event to watch for. The FOMC meeting is due for Wednesday. The markets have fully priced in a rate hike at this week’s meeting. Forward guidance will be crucial for the markets looking ahead.
The recent flat print in inflation is starting to stoke concerns on whether the Fed will be able to raise rates for the fourth time this year. The Fed Chairman, Powell will be holding a press conference later in the day. The ECB will be releasing its monetary policy meeting minutes later on Thursday. Given that there were no major policy decisions taken at the recent meeting, the minutes are unlikely to impact the markets much. From Japan, the BoJ’s core inflation data and housing starts will dominate the headlines. Data from Switzerland is quiet for the week ahead.
Chart set up:
The USDJPY currency pair extended gains for the past two weeks. However, the gains from last week showed that prices were losing momentum. By Friday’s close, the USDJPY was seen struggling to hold near 112.74. As a result price action fell to close slightly lower on the day.
Key support/resistance levels:
Support: 111.63; Resistance: 112.74
Commentary:
From a weekly perspective, given the failure to breakout above 112.74 is an indication that the USDJPY could be posting a correction in the short term. This means that the currency pair could be looking to correct to the lower support at 111.63.
This price level previously served as resistance and therefore is pending a retest. While we expect the declines to stall at 111.63 level, a breakdown below this level could potentially signal further declines. In the near term, price action is expected to trade within the said levels before more clarity emerges from the trend. For the week ahead, the USDJPY currency pair is expected to be slightly bearish.
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