Japanese yen weekly forecast: 140 key for USD/JPY ahead of U.S. economic data

Japanese yen technical forecast: mixed

The Japanese yen looks to end the week on a high considering the lower volatility created by the U.S. Thanksgiving holiday. In conjunction with the lesser market action, the USD has been under pressure post-FOMC minutes that reiterated moderating interest rate hikes. Next week will be largely focused on the U.S. with high impact events scattered throughout the week (see economic calendar).

The core inflation print and Non-Farm Payroll (NFP) will be the highlights and could support the current ‘moderation’ narrative or move against it giving hope to USD/JPY (大口） bulls.

Economic calendar

Technical analysis

USD/JPY daily chart

The daily USD/JPY chart shows price action sandwiched between the 137.67 swing low and the 140.00 psychological resistance handle. Although the Relative Strength Index (RSI) has recently come out of the oversold zone, the response to the FOMC minutes could spark a change in investor sentiment towards the dollar.

This could mean looking for downside as soon as the greenback shows some appreciation. The week ahead will be focused on the fundamental catalysts mentioned above and markets reaction around the key 140.00 zone.

A weekly close next week above or below 140.00 could spark short-term directional bias considering the amount of data being digested.

Key resistance levels:

• 142.25
• 140.00

Key support levels:

• 137.67
• 135.00

IG client sentiment points to short-term downside

IGCS shows retail traders are currently net SHORT on USD/JPY, with 52% of traders currently holding short positions (as of this writing). At DailyFX we take a contrarian view on sentiment, however, due to recent changes in long and short positioning we favor a bullish bias.

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.