Fundamental Analysis of USD/JPY for April 16, 2019

USD/JPY has been trading amid higher volatility making correctional moves. The pair is trading at near 112.00 area which prospects for a further decline in the coming days.

The US economy is coping well that is proved by economic data, but the inflation rate remains below the 2% target that was mentioned by Boston Fed President Eric Rosengren. To deal with inflation tensions, the US central bank can purchase longer-term assets to reduce their rates, using its balance sheet. But as the US 10-year Treasury yields are still low by historical standards, policymakers may wish to hold more short-term securities in good times. If the Federal Reserve fails to achieve the 2% inflation target, recession iwill loom the US economy that might be avoided by changing short-term interest rates. The Consumer Price Index increased by seasonally adjusted 1.9% that is still below the 2% target. The US labor market is healthy while GDP is expected to rebound in the next quarter that is expected by the federal Reserve in the latest minutes.

The unemployment rate was 3.8% in February while the production rate somehow rebounded in February. The US retail sales data will be published this week where the expectation of a 0.4% increase from the previous decline to -0.2%. The Industrial Production is expected to increase from 0.0% to 0.3% and the Building Permit is expected to come better.

On the JPY side, the BOJ insists on its ultra-loose monetary policy aiming to achieve the 2% inflation rate. Recently BOJ Governor Kuroda vowed to continue waiting patiently about monetary easing as it is taking longer to achieve the inflation target. Consumer inflation is still sluggish in Japan.

Today, Tertiary Industry Activity report of Japan was published with a slump to -0.6% from the previous value of 0.6% which was expected to be at -0.2%. Tomorrow Japan's Trade Balance is expected to show a deficit of -0.30 trln yen from the previous proficit of 0.12 trln yen.

Meanwhile, USD has lost the impulsive momentum it had over JPY earlier. So, JPY is going to hold the upper hand over USD in the coming days. The latest reports from Japan were quite positive. The consensus suggests positive upcoming economic reports. In the forecasts come true, JOY will receive solid support.

Now let us look at the technical view. The price is currently trading at near 112.00 with certain volatility. The price has been rejected off the same area several times. As the price remains firmly below 112.00 with a daily close, the pair will continue its uptrend with a target towards 110.00 area in the coming days.


The material has been provided by InstaForex Company -