Key Points:
- Market likely to focus upon the US PPI and JOLTS Job Openings Figures.
- Expect volatility given the variability within last week’s US data.
- Pair retains its neutral bias.
The USD/JPY saw plenty of selling in the early part of last week in response to the relatively poor US ADP Non-Farm Payroll result of 153k. This saw the pair rapidly decline back below the 116.00 handle before a late greenback rally saw the pair close the week around the 116.92 mark. However, the week ahead is also forming as one with the potential for a large range of swings as a range of US and Japanese economic data looms. Subsequently, let’s take a look at what happened last week and what is potentially on the horizon.
The USD/JPY had a week of sharp swings as the pair initially depreciated following the release of the relatively poor US ADP NFP figures, which came in well below market estimates at 153k. Subsequently, the Dollar depreciated strongly in response to the result and a market wide sentiment swing was largely seen. However, the USD/JPY managed to regain some of its losses late in the week as capital flowed back into the Greenback which saw the pair finish the week around the 116.92 mark.
The week ahead is shaping up as a busy one for the USD/JPY as the pair is facing down the looming spectre of a few fundamental risk events. In particular, the JPY Account Balance figures are due out early in the week and are expected to cause some volatility. Additionally, there is also a raft of US economic data due out with the majority of the focus likely to fall upon the US JOLTS Job Openings and PPI results. Subsequently, we could potentially see some swings for the pair in the week ahead.
From a technical perspective, the USD/JPY retains its neutral bias given that the RSI Oscillator remains flat and trendless, within neutral territory. In addition, price action seems to be largely within a sideways consolidation pattern and still needs to breach the resistance zone around 118.67 before it can cement a move higher. Support is currently in place for the pair at 116.18, 115.18, and 112.96. Resistance exists on the upside at 118.67, 121.70, and 123.69.
Ultimately, it will largely be the US JOLTS and PPI indicators which determine the pair’s trend in the coming days. However, there could be plenty of variability to these figures given the surprisingly poor NFP results of last week. Subsequently, expect volatility ahead for the USD/JPY as the market continues to digest the mixed US economic data.