USD/JPY – Pair Trading Quietly Close to 100

After lost week’s sharp volatility, USD/JPY has gone very quiet. The pair was trading in the mid-99 range in Wednesday’s European session, and has not made any moves towards the 100 level. However, the markets are expecting the dollar to push over this important barrier. In economic news, several Japanese events will be released later on Wednesday, the highlight being Core Machinery Orders. In the US, the markets will be paying close attention as the Federal Reserve releases the minutes of the most recent FOMC meeting. Analysts will be looking to see if the Fed discussed ending its current round of quantitative easing earlier than expected.

The markets are keeping a close eye on USD/JPY, which is very close to the 100 level. The Japanese currency has not been at such low levels since April 2009. Earlier this week, the minutes from the most recent BOJ policy meeting  were released, and there were no surprises. The minutes indicated that BOJ board members were set to unleash a radical overhaul of monetary policy. The BOJ has certainly not disappointed, wasting little time in implementing further easing measures. The BOJ plans to double its asset purchase program by 2015, and  made good on its promise to purchase large amounts of government bonds. This move is aimed at pushing down longer-term interest rates in order to encourage businesses to borrow and spend more in order to increase activity in the economy and eliminate inflation, which has hobbled the Japanese economy for 15 years. The BOJ began its purchase of government bonds on Monday, and said it would purchase JPY 1 trillion in 5-10 year bonds, and an additional JPY200 billion in bonds with maturities exceeding 10 years.

The US continues to churn out disappointing numbers, and every key release over the past two weeks has fallen below expectations. The data comes from across the economy – manufacturing, housing, consumer confidence and employment numbers have all missed their estimates. Employment numbers were dismal, and have helped the euro post impressive gains against the US dollar this week. Has the US recovery stalled? The US hasn’t released any key fundamentals so far this week. Unemployment Claims will be released on Thursday, and additional major releases are scheduled for Friday. If the US can turn things around and post some stronger numbers, we could see the dollar improve after losing ground to major currencies such as the euro and British pound.

USD/JPY for Wednesday, April 10, 2013

USD/JPY 99.48 H: 99.58 L: 98.91

USD/JPY continues to trade quietly, a trend we have seen throughout this week. The pair is facing resistance at 99.57. This is a weak line, and if the pair can break through, it could push right up to the 100 level. On the downside, there is support at 98.45. This is followed by a support line at 97.24.

• Current range: 98.45 to 99.57

Further levels in both directions:

• Below: 98.45, 97.24, 96.03, 95.27 and 94.59
• Above: 99.57, 100, 100.54 and 101.81

OANDA’s Open Position Ratios

USD/JPY is showing very little movement in the Wednesday session. This lack of activity is reflected in what we are seeing from the pair, which continues to display subdued trading. Traders should keep an eye on the ratio, as renewed activity could signal that the pair will break out from the present drifting.

USD/JPY is tantalizingly close to the 100 level, but appears to have run out of steam after last week’s spectacular rally. Still , the 100 line should be breached soon, as there is little to support the slumping Japanese currency.

USD/JPY Fundamentals

• 14:30 US Crude Oil Inventories. Estimate 1.6M.
• 17:00 US 10-year Bond Auction.
• 18:00 US FOMC Meeting Minutes.
• 18:00 US Federal Budget Balance. Estimate -110.3B.
• 23:50 Japanese Core Machinery Orders. Estimate 6.9%.
• 23:50 Japanese Corporate Price Goods Index. Estimate -0.4%.
• 23:50 Japanese M2 Money Stock. Estimate 2.9%.

*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.