Fundamental Analysis of USD/JPY for April 2, 2018

USD/JPY has been quite volatile above the 105.50 price area from where the market has rejected the bears for several times in a row recently. JPY has been the dominant currency in the pair since it bounced off the 114.50 price area after certain volatility and correction. The economic calendat contains some macroeconomic reports from the US this week like Non-Farm Employment Change, Average Hourly Earnings, and Unemployment Rate. They are expected to be quite optimistic for the currency. So, USD is sure to get certain bias from the market sentiment. Today, US ISM Manufacturing PMI report is going to be published which is expected to have a slight decrease to 60.1 from the previous figure of 60.8, Construction Spending is expected to increase to 0.4% from the previous value of 0.0%, ISM Manufacturing Prices is expected to decrease to 72.5 from the previous figure of 74.2, and Final Manufacturing PMI is expected to be unchanged at 55.7. On the other hand, today BoJ Tankan Manufacturing Index report was published with a decrease to 24 from the previous figure of 26 which was expected to be at 25, Tankan Non-Manufacturing Index report also decreased to 23 from the previous figure of 25 which was expected to be at 24, and Final Manufacturing PMI showed a slight decrease to 53.1 which was expected to be unchanged at 53.2. As for the current scenario, JPY is likely to lose some momentum against USD amid discouraging reports this week, whereas certain volatility may occur which might lead to short-term gains on the JPY side. However, the US economic reports provide s fresh impetus for the currency this week, further bullish pressure is expected in the future.

Now let us look at the technical view. The price is currently residing at the edge of a dynamic level of 20 EMA below the 107.30 price area that indicates a certain bearish bias is still left in the market. This might lead the price to proceed lower towards 105.50 in the coming days. If the price rejects off the 105.50 with a daily close, which is more probable this week, further bullish pressure towards 107.30 and later towards 108.50 is expected. On the other hand, if the price closes below 105.50 with a daily close, further bearish pressure will be expected. For now, after having a bearish false break below 105.50, the market sentiment is set to push higher in the future. As the price remains above 105.50, bearish intervention is most probable in the future.

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