Fundamental analysis of USD/JPY for March 19, 2019

USD/JPY has been quite volatile after rejecting off the 112.00 area recently which lead the price to reside below 111.50. It is set to move further downward in the process. Japan posted upbeat economic results while the BOJ kept the interest rate unchanged. Amid that, JPY is expected to gain ground against USD in the process.

Japan's government aims to keep the economy growth at a moderate pace but drawbacks like worse economic reports and external trade war pressures dent the economic development. Japan's exports and factory output weakened due to a slowdown in the global growth. What is more, the US-China trade war is still unsettled. The Bank of Japan kept its rate unchanged last week but if needed the rates and monetary policy can be changed to keep the economy progress moderate.

Recently, the trade balance report was published with an increase to 0.12T from the previous figure of -0.29T which was expected to be at 0.09T. Besides, the revised industrial production also increased to -3.4% which was expected to be unchanged at -3.7%. Ahead of the Monetary Policy Meeting Minutes tomorrow, JPY gains are expected to be a bit volatile and corrective over USD in the process.

On the other hand, ahead of FOMC statement and Federal Funds Rate report which is expected to be unchanged at 2.50%, USD is expected to be quite volatile with the upcoming gains. Currently, the Fed is in the wait and see approach, so the interest rate is unlikely to be changed in 2019. Moreover, rate cuts may be observed in 2020 if the economy does not develop as planned. The US economy is currently dealing with mixed economic results along with a slowdown in jobs growth and rising wages. It is expected to affect the economy significantly.

Recently, the US NAHB Housing Market Index report was published unchanged at 62 which was expected to increase to 63. Today the US Factory Orders is expected to increase to 0.3% from the previous value of 0.1%.

As of the current scenario, USD, being affected be an economic slowdown and worse economic reports, is expected to lose momentum against JPY. Though Japan's economy is still quite vulnerable but being on the hawkish expectation, the Federal Reserve is indecisive. The current economic projection is expected to lead to certain USD weakness against JPY in the process.

Now let us take a look at the technical view. The price is currently residing below 111.50 area with a daily close but it is also held by the dynamic level of 20 EMA as support. The preceding non-volatile bullish trend has been carrying the price towards 112.00 area with strong momentum. However, a daily close below 111.50 indicates further downward momentum with a target towards 110.00-50 support area in the coming days. As the price remains below 112.00 area with a daily close, the bearish bias is expected to continue.

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The material has been provided by InstaForex Company - www.instaforex.com

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