USD/JPY – Yen Rebounds, Moves Below 120

USD/JPY has posted strong gains on Tuesday, as USD/JPY is trading in the mid-119 range late in the North American session. On the release front, it’s another quiet day, with no Japanese releases. In the US, today’s highlight is US CB Consumer Confidence. The markets are expecting a strong improvement in the December reading, with the estimate standing at 94.6 points.

Japanese Prime Minister Shinzo Abe has wasted little time in tackling the country’s economic woes, after winning the election earlier this month. On Saturday, Abe unveiled a stimulus program worth JPY 3.5 trillion. The program aims at reviving consumer spending, which has been sluggish since a sales tax hike back in April. The government expects the scheme to add 0.7% to GDP, which has contracted for two straight quarters, as the economy is officially in recession.

Last week’s Japanese releases underscored an economy that continues to struggle as we head into 2015. Tokyo Core CPI, the key inflation indicator, edged down to 2.3% in November, matching the market forecast. However, the indicator continued a worrying downward trend, dropping for a fourth straight month. Consumer demand remains weak, as Household Spending posted a sharp decline of 2.5%. Retail Sales posted a gain of 0.4%, but this was well short of the forecast of 1.2% and the weakest showing since June. There was no relief from the manufacturing front, as Preliminary Industrial Production fell by 0.6%, well short of the estimate of a 1.0% gain.

USD/JPY for Tuesday, December 30, 2014

USD/JPY December 30 at 12:40 GMT

USD/JPY 119.43 H: 120.67 L: 119.18

USD/JPY Technical

• USD/JPY edged lower in the Asian session and posted stronger losses in the European session, breaking below support at 119.83.
• 119.83 has switched to a resistance role as the dollar has lost ground and is a weak line. 120.63 is next.
• 118.69 is a strong support level.
• Current range: 118.69 to 119.83

Further levels in both directions:

• Below: 118.69, 117.94 and 116.69 and 115.56
• Above: 119.83, 120.63, 121.39, 122.18 and 124.16

OANDA’s Open Positions Ratio

USD/JPY is pointing to gains in short positions on Tuesday. This is consistent with the pair, as the yen has shown strong gains on the day. The ratio has a majority of long positions, indicative of trader bias towards the dollar continuing to post gains.

USD/JPY Fundamentals

• 14:00 US S&P/CS Composite-20 HPI. Estimate 4.4%.
• 15:00 US CB Consumer Confidence. Estimate 94.6 points.

*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.