USDJPY Weekly Forex Forecast – 22nd to 26th Oct 2018
Fundamentals Outlook
The week ahead is shaping up to be a quiet week. Data from the Eurozone will cover the monthly flash PMI’s for the manufacturing and services sector. Overall economic activity in the sectors is expected to remain unchanged and maintain the current pace of momentum. With lack of economic data to go by, the ECB’s monetary policy meeting will stand out. No changes are expected as the central bank will maintain its stance on ending QE this December. The meeting minutes come on the back of last week’s FOMC meeting minutes.
Investors will be looking to the ECB’s forward guidance, which will play a big role in shaping the expectations on the timing of the interest rate hikes in the Eurozone. The markets could see some volatility especially if the ECB officials come out dovish. Data from the U.S. is quiet for the most part. Friday’s third quarter advance GDP report will be closely watched. The U.S. economy is expected to maintain its 4% quarterly growth rate on average. While data from Switzerland is quiet, Japan will be releasing its monthly inflation figures.
Chart set up: The USDJPY currency pair was seen settling within the range of 112.74 and 111.78 resistance and support levels respectively. This flat price action could signal a temporary pause to the declines. However, a breakout from this level will determine the next leg in the direction for the USDJPY currency pair.
Key support/resistance levels:
Support: 111.75; Resistance: 112.74
Commentary:
In the medium term, we anticipate a potential break out to the upside. A close above 112.74 is needed for USDJPY to test the previously established support level that was breached. Forming resistance here could signal a potential move to the downside eventually. However, if the USDJPY currency pair fails to hold near the current support level, we expect the declines to test the lower support at 110.50 level. Still, the overall trend remains flat in the medium to longer term horizon.
For the week ahead, the USDJPY currency pair is expected to be bullish.
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