USD/JPY – Japanese Yen Dips as US Dollar Posts Broad Gains

The Japanese yen is lower in Tuesday trade. In the North American session, USD/JPY is trading at 106.44, up 0.32% on the day. It’s very quiet on the release front, with no US events. In Japan, banks and stock markets are closed for Vernal Equinox Day. On Wednesday, the US releases Current Account and Existing Home Sales. All eyes will be on the Federal Reserve, which is expected to raise interest rates for the first time in 2018.

There were no surprises from the Bank of Japan, which published its summary of opinions from the March meeting on Monday. Members voted 8-1 to maintain its aggressive monetary easing program. Given that inflation is around 1%, well below the target of just below 2%, there are no plans for normalization in the near future. The summary was decidedly dovish, with members stating that if there was an increased risk of a delay in reaching the inflation target, additional easing would be needed. There have been concerns that the current framework is unsustainable, but until inflation levels move higher, it’s a safe bet that any changes to monetary policy will be mere tweaks, which are unlikely to shake up the markets.

The Federal Reserve is poised to raise interest rates on Wednesday, which would mark the first hike of 2018. According to the CME Group, the odds of a quarter-point raise stand at an impressive 94 percent. What can we expect from the Fed during the year? The current Fed projection remains at three hikes, but a robust US economy has raised speculation that the Fed could accelerate the pace to four hikes, which would be good news for the US dollar. Investors will be keeping a close eye on key US data, especially upcoming inflation indicators. If these numbers improve, we’re likely to see four rate hikes in 2018.

USD/JPY Fundamentals

Tuesday (March 20)

• There are no Japanese or US events

Wednesday (March 21)

• 8:30 US Current Account. Estimate -125B
• 10:00 US Existing Home Sales. Estimate 5.41M
• 14:00 US FOMC Economic Projections
• 14:00 US FOMC Statement
• 14:00 US Federal Funds Rate. Estimate <1.75%
• 14:30 US FOMC Press Conference
• 20:30 Japanese Flash Manufacturing PMI. Estimate 54.3

*All release times are EST

*Key events are in bold

USD/JPY for Tuesday, March 20, 2018

USD/JPY March 20 at 11:05 EST

Open: 106.10 High: 106.61 Low: 105.93 Close: 106.44

USD/JPY Technical

USD/JPY edged higher in the Asian and European sessions. The pair has been flat in North American trade

• 105.53 is providing support
• 106.64 is under pressure in resistance. This line could break on Tuesday

Further levels in both directions:

• Below: 105.53, 104.32 and 103.09
• Above: 106.64, 107.29, 108.00 and 109.11
• Current range: 105.53 to 106.64

OANDA’s Open Positions Ratios

USD/JPY ratio is showing gains in long positions. Currently long positions have a majority (75%), indicative of trader bias towards USD/JPY continuing to move to higher ground.

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.