Fundamental Analysis of USDJPY for April 22, 2019

The USD/JPY pair has been consolidating at the edge of the 112.00 area for a few days now. Later, it is likely to have a Bearish Counter as well as a strong bullish trend.

The US dollar seems to be quite indecisive ahead of GDP reports that are due this week. The US Advance GDP is anticipated to remain unchanged at 2.2%, while the Advance GDP Price Index – to drop to 1.3% from the previous value of 1.8%. According to Atlanta Federal Reserve GDPNOW Forecast model, the US economy expanded at 2.8% annualized rate in the first quarter as domestic retail sales grew at their strongest pace in March. US President Donald Trump and Japanese Prime Minister Shinzo Abe are going to meet in the White House for the US-Japan trade talks. The outcome may impact on the stability of the US economy. Moreover, the US Core Durable Goods Orders report is going to be published this week. It is expected to rise to 0.2% from the previous negative value of -0.1%, and Durable Goods Orders index is to grow to 0.7% from the previous negative value of -1.6%.

Today's US Existing Home Sales report is going to show a decrease to 5.31M from the previous figure of 5.51M. In this case USD may struggle to sustain the momentum over JPY in the coming days.

On the other hand, the Bank of Japan will release its Policy Rate Decision along with the Outlook Report and the Monetary Policy Statement this week. However, these news are not likely to have any major impact. The bank predicts the inflation to remain below 2% target through the fiscal year that ends in March 2022. Such an estimate reflects the confusion of the regulator as subdued inflation forces it to maintain the ultra-loose policy.

Japan's economy minister Motegi recently stated that the US-Japan trade deal was expected to lower its trade deficit and help the economy to gain a momentum. Japan's March factory output is forecast to slip for the first time in two months, although the central bank is expected to keep its policy unchanged as it bets on a gradual economy's recovery despite rising risks. Tomorrow's BOJ Core CPI report is forecast to inch up to 0.5% from the previous value of 0.4%, and Wednesday's SPPI report is to be unchanged at 1.1%.

As of the current scenario, the pair is likely to be quite volatile this week amid the BOJ's Policy Rate report and US Advance GDP report. If the US economic reports bring any negative outcome, the yen is expected to strengthen.

Now, let us look at the technical view. The pair is currently trading at the edge of 112.00 resistance area, it has been trying to break above for a few days now. The price recently formed Bearish Regular Divergence indicating certain bearish sentiment in the coming days. Thus, the pair is anticipated to move lower towards the 111.50 support area and later towards the 110.50 area. As far as the price remains below 112.00 area, 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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