Monday, October 15, 2018

USD/JPY - 16 October 2018


Fundamental Highlights

Dollar/Yen starts Tuesday trading on a positive note after slipping during the previous trading session. The US dollar dropped on Monday after the US reported worse than expected retail sales figures. In September, the month on month retail sales figure rose only by 0.1% compared to the expected 0.7% rise. The weakness in retail sales is consistent with the lower than expected CPI figures released last week, with both figures showing a lack of overheating in the US economy. As economic data continues to show no overheating in the US market, investors will continue to price in a change in the Federal Reserve’s policy by selling the US Dollar. For today, the Dollar/Yen was able to recover some of its Monday losses as equity markets edge higher with the S&P futures rising 0.37%. From the economic data front, investors need to keep an eye on the following figures: the European ZEW Economic Sentiment figure as it will give the market an idea about sentiment surrounding the European market which will drive the safe haven demand of the Yen, the US JOLTs Job Openings figure which will drive the demand for the US dollar.

Technical Analysis

The pair failed to break below the 111.83 support level and bounced back up towards 112.10. Most recently, the pair was able to break above the 13-period moving average signaling a short term shift in momentum. If equity markets continue to trend upwards, the Dollar/Yen is projected to continue with its rise. A confirmation of a shift in sentiment will be in place if the pair broke above the 200-period moving average (purple) paving the way for a rise towards the 112.83 resistance level. If sentiment remains bearish and the pair manages to break below 111.63 then the 111.37 level will be exposed.

Support: 111.63 111.37
Resistance: 112.48 112.83

Chart (H4)