Analysis

USD/JPY – Volatility continues for yen, U.S. data disappoints

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After a listless start to the week, USD/JPY has posted considerable gains. In Tuesday’s North American session, the pair is trading at 110.56, up 0.54% on the day. In the U.S., economic data disappointed. Building permits slowed to 1.30 million, shy of the estimate of 1.32 million. CB consumer confidence fell sharply to 124.1, well below the estimate of 132.1 points. In Japan, BoJ Core CPI, dropped to 0.4%, down from 0.5% in the previous release.

Japan’s economy remains fragile, with exports down due to the global trade war. BoJ policymakers remain nervous, and the summary of opinions from the March policy meeting indicated that members debated whether to ramp up stimulus in order to boost the economy. There are concerns that the economy could be heading towards a recession, given the weak global climate and the tax hike scheduled for October.

The Federal Reserve has become more dovish, leaving investors in a glum mood. At last week’s meeting, policymakers indicated they had no plans to raise interest rates in 2019 and also lowered its growth forecast for 2019 to 2.1%, down from 2.3% in December. There was more bad news on Friday, as the spread between 3-month and 10-year Treasury notes turned negative for the first time since 2007, pointing to an inverted yield curve. All eyes will be on U.S. Final GDP, which will be released on Thursday. If GDP is weaker than expected, investors could lose their risk apetite and the safe-haven yen could get a boost.

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USD/JPY Fundamentals

Tuesday (March 26)

1:07 BoJ Core CPI. Actual 0.4% 6:30 US FOMC Member Evans Speaks 8:30 US Building Permits. Estimate 1.32M. Actual 1.30M
8:30 US Housing Starts. Estimate 1.22M. Actual 1.16M 9:00 US HPI. Estimate 0.4%. Actual 0.6% 9:00 US S&P/CS Composite-20 HPI. Estimate 4.3%. Actual 3.6% 9:59 US Richmond Manufacturing Index. Estimate 12. Actual 10 10:00 US CB Consumer Confidence. Estimate 132.1. Actual 124.1

*All release times are EST

*Key events are in bold

USD/JPY for Tuesday, March 26, 2019

USD/JPY March 26 at 11:15 DST

Open: 109.97 High: 111.69 Low: 109.94 Close: 110.56

USD/JPY Technical

S3 S2 S1 R1 R2 R3 108.11 109.37 110.28 110.90 112.16 112.93

USD/JPY posted slight losses in the Asian session and edged higher in European trade. The pair has ticked higher early in North American trade

110.28 is providing support 110.90 is the next resistance line Current range: 110.28 to 110.90

Further levels in both directions:

Below: 110.28, 109.37 and 108.11 Above: 110.90, 112.16, 112.93 and 113.70

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.

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