Look at on the chart, U/J is trapped in an ascending wedge: the range gradually tighter, the breakout likely occur, the problem is WHEN and WHERE. Obviously, U/J is waiting signal to run out this ascending . Fundamental factors must provide enough catalyst for U/J to rally or sell off. Last week, we heard about BoJ announcement, they kept unchanged , and extended loan schemes for bank system. I thought BoJ Meeting could change the current situation of U/J but it unfortunately doesn’t happen. The main reason was bad weather of US hold US stocks unchanged, and negative US data didn’t support to Greenback. However, everything is gradually changing recent days, I have confidence in the big move of Forex market. Now I consider each factor having impact on USDJPY .
Firstly,there a lot of Japan economic data are released tomorrow, those are very very important data.
- National CPI (YoY) : This is the most important indicator which BOJ as well as Shinzo Abe government observe because they are pursuing 2% target, the advance of CPI would prove their policies is reasonable.
- Unemployment Rate : I ignore this data because Japan economy doesn’t confront with unemployment problem like US or UK.
- Industrial Production: I especially pay my attention in this data. Japan economy mainly depend on Manufacturing sector and export: Japan exports cars, machines… Shinzo Abe government and BOJ like to devaluate Japanese Yen to support export sector of Japan; if Industrial Production is positive, they would be confident in the robust of Japan economy.
Secondly, I keep an keen eye on Chinese Renminbi : USD/CNY jumped to the strongest level from November. The devaluation of China Yuan is a unsual signal because recent year, the Greenback lost its value against China Yuan. The stable development of China dragged Renminbi rising against USD. Now, this trend is reversed; one main cause is the slowdown of China economy pushed pressure on PBC to take action to support for China manufacturing and export sectors : devaluing China Renminbi to offset the drop of export and Manufacturing sector. This would affect negatively to other Asian currencies such as Japanese Yen , Aussie, Kiwi because China is the main trading partner of Japan, Australia, and New Zealand.
Thirdly, today New Home Sales of US is very positive: climb to 468k in January. Although New Home Sales just account 7% of total home sales of US Housing sector, but it is the leading indicator of US economy. This hints that the Housing sector would be better next months, and will be positive for US dollar . More Home Sales, more spending in furniture and home-related sectors such as renovation, more income for US citizen, benefit to US economy. The bad weather could delay Housing sector in some months, but I think the situation would be better and US economy would come back it developing pace as FED expect and believe. If US economy grows positively, US equity grows too, and USDJPY would be higher as a result.
There is a strong resistance at 103.43
103 level is a good resistance level: Psycho level.
The ascending also provides , but it’s temporary, breakout must occur , and those level will quickly pierced.
The is a strong support. ( purple line on the chart).
If I believe in of USDJPY: I think U/J would test 103 first, and then 103.43 level.
Currently, I have a LONG position from last week. I set two targets: 103 , and then 103.43
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