USD/JPY – Dollar Eases But Remains Above 100

The Japanese yen has started the week with gains against the US dollar. USD/JPY remains above the 100 line, but this key level is under pressure in Monday trading. It’s a quiet start to the week, with no major US releases. There are no Japanese events on Monday.

On Thursday, the dollar flexed some muscle, as it broke above the key 100 level for the first time in two months. The US currency took advantage of a weak Japanese GDP release for Q3. Although the gain of 0.5% edged above the estimate of 0.4%, GDP has been falling in 2013, pointing to weakening economic activity. The yen dropped sharply in response, and continues to trade above the 100 line.

Unemployment Claims have been fairly steady over the past few weeks, but with speculation increasing about a possible December taper by the Federal Reserve, every employment release is under the market’s microscope. On Thursday, the key indicator showed little change with a reading of 339 thousand, but this was above the estimate of 331 thousand. There wasn’t any relief from Thursday’s other key release, Trade Balance. The October deficit widened to -$41.8 billion, compared to -$38.8 billion in September. This was well above the estimate of -$38.7 billion.

Late last week, Federal Reserve chair-elect Janet Yellen testified before the powerful Senate Banking Committee. Yellen has been an ardent supporter of QE, and told the committee that the present level of asset purchases should continue until growth improves and unemployment falls. She said that the labor market and economy are performing “far short of their potential”, but added that she expects inflation to remain below the Fed’s target of 2%. Yellen, who is slated to become the first woman to head the Federal Reserve, will take over from Bernard Bernanke in January.

USD/JPY for Monday, November 18, 2013

USD/JPY November 18 at 12:30 GMT

USD/JPY 100.09 H: 100.36 L: 99.79

USD/JPY Technical

• USD/JPY has lost ground in Monday trading. The pair lost ground in the Asian session and dropped below the 100 line, but has bounced higher in the European session.
• On the downside, the key level of 100.00 is providing support. This is a fluid line and could see further activity during the day. There is stronger support at 98.92.
• The pair is facing resistance at 101.19. The next resistance line is at 102.53, which has remained in place since early May.
• Current range: 100.00 to 101.19

Further levels in both directions:

• Below: 100.00, 98.92, 98.15, 97.18 and 96.00
• Above: 101.19, 102.53, 103.30 and 104.17

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions in Monday trading. This is not reflected in the current movement of the pair, as the yen has reversed directions and has moved upwards. Long positions have a slight majority, indicative of a trader bias towards the US dollar resuming the upward movement we saw last week and posting gains at the expense of the yen.

The yen has shown some strength on Monday but USD/JPY continues to trade at high levels and remains above the 100 line. This key level could face more activity during the day.

USD/JPY Fundamentals

• 6:00 FOMC Member Eric Rosengren Speaks.
• 14:00 US TIC Long-Term Purchases. Estimate 21.3B.
• 15:00 US NAHB Housing Market Index. Estimate 56 points.
• 17:15 FOMC Member William Dudley Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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.