USD/JPY Fundamental Analysis – week of July 25, 2016 -Forecast

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Updated: Jul 24, 2016, 11:22 UTC

The USD/JPY eased from its highest level of the year but remains near its top at 106.13 seeing a gain of 1.23% as the greenback rallied late on Friday.

USD/JPY Fundamental Analysis – week of July 25, 2016 -Forecast

The USD/JPY eased from its highest level of the year but remains near its top at 106.13 seeing a gain of 1.23% as the greenback rallied late on Friday. FOMC possibilities became a major issue again on Friday as data supports a growing economy. The focus this week with be the FOMC and BoJ meetings and the possibility of helicopter money from Japan.

Positive housing start data Stateside has caused the local currency to jump to four-month peaks this week. But on the whole, the economic picture in the US remains patchy, and the Fed could maintain its dovish course for some time to come.

Meanwhile, many other central banks are tipped to embark on further stimulus measures to keep their economies afloat, a scenario that would provide gold with additional fuel.

The Bank of England is widely expected to cut rates to fresh lows as soon as August as the Brexit fallout begins to bite. And the European Central Bank could be forced into extending its monetary assistance should economic contagion begin to spread.

The Bank of Japan is also predicted to turn the money pumps back on at next week’s meeting as the country still battles to generate growth.

USDJPY has been moving inside a descending channel on its 4-hour time frame and is currently testing the resistance. This lines up with the 61.8% Fibonacci retracement level on the latest swing high and low, also coinciding with an area of interest at the 107.00 major psychological level.

If this holds as a ceiling, price could resume its drop to the previous lows at the 100.00 mark or onto the channel support at 98.00. The 100 SMA is below the 200 SMA for now, confirming that the path of least resistance is to the downside, but an upward crossover seems imminent.

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Major Economic Events for the week:

Date	Currency	Name	Volatility	Previous	Consensus
7/27/2016	AUD	Consumer Price Index (YoY)	3	1.3	1.1
7/27/2016	USD	Durable Goods Orders	3	-2.2	-1.1
7/27/2016	USD	Fed’s Monetary Policy Statement	3
7/27/2016	USD	Fed Interest Rate Decision	3	0.5
7/28/2016	JPY	BoJ Press Conference	3
7/29/2016	JPY	BoJ Interest Rate Decision	3	-0.1	-0.2
7/29/2016	JPY	BoJ Monetary Policy Statement	3
7/29/2016	EUR	Gross Domestic Product (YoY)	3	1.7	1.6
7/29/2016	EUR	Gross Domestic Product (QoQ)	3	0.6	0.3
7/29/2016	EUR	Consumer Price Index (YoY)	3	0.1
7/29/2016	EUR	Consumer Price Index – Core	3	0.9