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USD/JPY camotose above 111 amid thin holiday trading

  • USD/JPY consolidates Wednesday's heavy losses.
  • The pair remains directionless in a tight range.
  • Nikkei Manufacturing PMI from Japan will be eyed next.

Following yesterday's 100-pip drop, the USD/JPY pair pushed lower to a fresh 2-month low at 111.06 in the early Asian session but struggled to preserve its bearish momentum as the trading volume remained low throughout the day amid the Thanksgiving holiday in the U.S. As of writing, the pair was trading at 111.23, virtually unchanged on the day.

Markets to remain calm on Friday

The Nikkei Manufacturing PMI, which is expected to ease to 52.6 from 52.8 in November, will be the only data from Japan but is unlikely to trigger any reactions from the market. In fact, Robert Rennie, Research Analyst at Westpac, expects the pair to remain neutral in the coming week as well. "We have a heavy run of data in Japan next week. This starts with the flash PMI tomorrow, then kicks into gear with retail sales Wednesday, IP Thursday and CPI, jobs and the capex survey next Friday. As ever though, it’s hard to see this impacting much on the ¥ which remains driven by expectations for the US tax plan,” Rennie explains.

Although all NYSE markets will reopen tomorrow, they will close at mid-day and are unlikely to provide any clues on the market sentiment and provide a catalyst for the pair.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, writes, "according to the 4 hours chart, the scale also leans toward the downside, as the pair is developing below its 100 and 200 SMAs, with the shortest nearing the larger from above, as technical indicators consolidate within extreme oversold readings, with no signs of downward exhaustion. As mentioned on a previous update, the pair has an unfilled weekly opening gap at 110.82 from mid-September, now the immediate support. A break below it should result in an acceleration of the bearish trend, with scope then to test the 110.00 level."

According to the analyst, supports for the pair could be seen at 110.80, 110.35 and 110.00 while resistances align at 111.60, 112.00 and 112.40.

  • USD/JPY still bearish, could slip back to 110.30 – UOB

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