Fundamental Analysis of USD/JPY for June 11, 2018

USD/JPY has been quite surprising with the impulsive bullish momentum today after bouncing off the 109.20 recently. The bearish momentum in this pair was quite strong recently, while it took off with an impulsive bullish momentum today.

Ahead of the BOJ Policy Rate to be published on Friday, which is expected to be unchanged at -0.10% and BOJ Policy Statement to be followed after that, the pair is likely to trade with higher volatility this week. Though BOJ has been planning a long-term economic growth rather than any immediate effect, USD has been struggling in light of the recent economic reports and events as well. Today, Japan's Core Machinery Orders report was published with an increase to 10.1% from the previous value of -3.9% which was expected to be at 2.5%, M2 Money Stock remained unchanged at 3.2% which was expected to increase to 3.3%, and Prelim Machine Tool Orders report was published with a decrease to 14.9% from the previous value of 22.0%.

On the USD side, this week US CPI, PPI, and Retail Sales reports are going to be published. They are expected to have optimistic impact on USD in the coming days. Though today there are no macroeconomic reports to support USD gains, pending high impact economic reports later this week are expected to have effect on further gains.

As for the current scenario, USD is expected to gain further over JPY in the coming days if BoJ fails to impress market participants with changes in its policy. Though USD is expected to have an upper hand over JPY, the current market situation is quite volatile as the recent G7 Meeting will entail more events to happen in the coming days.

Now let us look at the technical view. The price is currently residing inside the range of 108.50 to 110.50 from where it definitely needs a breakout below or above for definite trend pressure. As the preceding trend in place is bullish, the price is expected to break above 110.50 in the coming days with a target towards 112.00. A break below 108.50 will push the price lower towards 105.50 which is currently unlikely. As the price remains above 108.50, the bullish bias is expected to continue.

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