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USD/JPY: Yen Improves, Flirts With 120

USD/JPY: Yen Improves, Flirts With 120

USD/JPY is steady on Friday, as the yen trades at 120.30 in the European session. In economic news, US markets are closed for the Christmas Day holiday. Japanese markets are open, and there were two minor indicators on the schedule. BOJ Core CPI remained steady at 1.2%, while BOJ Housing Starts improved to 1.7%.

The yen has shown some marked improvement in December, making up for a poor November performance against the US dollar. USD/JPY has dropped some 300 points this month, and touched the symbolic level of 120.00 earlier on Friday, its lowest level since October 28. The Bank of Japan has been under strong pressure to expand its easing program, given the lackluster performance of the Japanese economy, which has been hit hard by the twin blows of weak global demand for Japanese goods and sluggish domestic economic activity. Despite the sluggish economy, the BOJ has been very reluctant to further expand easing, and did not make any changes to monetary base easing of JPY 80 trillion annually. However, the BOJ did make some adjustments to monetary policy at its December policy meeting, announcing that it would purchase 300 billion yen of ETF’s annually, as well as extend the average duration of Japanese government bond purchases to 7-12 years, up from 7-10 years, commencing in 2016. The BOJ kept a low profile over the move, which BOJ Governor Haruhiko Kuroda described as “tinkering”. Given current economic conditions, the BOJ may have to make more significant monetary moves early in the new year, and this could send the Japanese yen to lower levels.

USD/JPY Fundamentals

Friday (Dec. 25)

  • 5:00 BOJ Core CPI
  • 5:00 BOJ Housing Starts

*Key releases are highlighted in bold

*All release times are GMT

USD/JPY for Friday, December 25, 2015

USD/JPY Chart

USD/JPY December 25 at 11:00 GMT

USD/JPY 120.31 H: 120.00 L: 120.43

USD/JPY Technical

S3S2S1R1R2R3115.45116.88118.53120.40121.50122.40
  • USD/JPY has been uneventful in the Asian and European sessions
  • There is resistance at 121.50
  • 118.53 is providing support
  • Current range: 118.53 to 120.40

Further levels in both directions:

  • Below: 118.53, 116.88 and 115.45
  • Above: 120.40, 121.50, 122.40, and 123.74

OANDA’s Open Positions Ratio

In the USD/JPY ratio, long positions continue to command a solid majority (68%), which is indicative of strong trader bias towards the pair moving higher.

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