Dollar/yen did not go anywhere fast in the first week of 2018. The US dollar was down against many currencies despite good data, but this did not affect USD/JPY. The stability came despite a busy week to start the year. Will the pair move now, when the calendar is lighter?

USD/JPY fundamental movers

Good US data, balanced Fed

The ISM Manufacturing PMI and the ADP NFP significantly beat expectations, leading to higher expectations for the NFP.

The FOMC meeting minutes showed a divided Federal Reserve. They still haven’t figured out why inflation remains low. Nevertheless, the hawkish camp seems to be in control, at least for now, until Powell enters his role as Fed Chair.

Japan was on holiday throughout most of the week, but the Nikkei stock index reached new highs. In theory, that should support a stronger USD/JPY, but there is no evidence of that so far.

Inflation, retail sales and perhaps political developments

The second week of 2018 looks light in terms of calendar events, but still features the all-important CPI report from the US. The retail sales data will be released at the same time and will compete for attention. The PPI is also worth mentioning as a warm up to the CPI data. 

The scandals engulfing the White House have raised a lot of interest but haven’t triggered any market movements. Will it change as the book is actually published? 

In Japan, consumer confidence, the current account, and the economy watchers sentiment are released but are unlikely to trigger any reaction.

See all the main events in the Forex Weekly Outlook

Key news updates for USD/JPY

USD/JPY Technical Analysis

115.35 is an old line that served as support when the pair traded on higher ground. 114.50 is the cycle high last seen in early July. The pair got close to that level.

113.70 was a separator of ranges in June and a line of resistance in December. It caps the range. 112.90 served as support in December and is a pivotal line in the range.

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