USDJPY Weekly Forex Forecast – 1st to 5th Oct 2018
The economic calendar for the week ahead will be dominated fresh monthly reports. The data will shed light on the final month of the third quarter. This will help investors to assess how various economies performed during this period. The week starts off with final services and manufacturing PMI reports from the Eurozone. Recent estimates put manufacturing PMI easing back while services PMI remained steady.
Data from Japan will see the release of the household spending and the average cash earnings. The two aspects will be crucial in shaping inflation expectations. While data from Switzerland is quiet for the week ahead, the data from the U.S. will keep the markets busy. The monthly ISM’s manufacturing and non-manufacturing PMI reports will be coming out. This is later followed by the monthly ADP private payrolls report and eventually culminate with the official payrolls data.
Chart set up:
The USDJPY was seen rising strongly on the week. Price action broke past the resistance level of 112.74 to extend to new highs. The bullish price action could potentially signal further upside in the currency pair in the coming weeks. However, the newly breached resistance will need to be retested for support.
Key support/resistance levels:
Support: 112.74; Resistance: 113.58
The U.S. dollar was bullish against the yen last week with the currency pair closing out near a previous resistance level of 113.58. Price action could potentially ease back from here on a reversal candlestick pattern on the 4-hour chart. The strong momentum led gains is also signaling a bearish divergence.
This could mark a potential correction to the downside. The lower support at 111.63 remains a potential target. However, ahead of this, the USDJPY will need to break past the main support established at 112.74. In the near term, we could therefore anticipate a sideways range forming out within the mentioned support and resistance levels. For the week ahead, the USDJPY currency pair is expected to be flat.
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