Forex Market: USD/JPY trading forecast for Monday

Friday’s trade saw USD/JPY within the range of 115.82-117.78. The daily low has also been the lowest level since December 16th. The pair closed at 117.64, gaining 1.21% on a daily basis. USD/JPY lost 0.75% for the whole week, which marked a second consecutive weekly drop. On Monday (December 19th) the cross may be influenced by the following list of fundamentals.

Fundamentals

Japan

Consumer Confidence

Confidence among consumers in Japan probably remained almost unchanged in December, with the corresponding index coming in at a reading of 38.0, up from 37.7 in November. The latter has been the lowest index level since April, when it was reported at 37.0.

The index is based on a monthly survey that covers almost 4 700 households consisting of more than two persons. The questionnaire features four subjects – consumer perceptions of overall livelihood, income growth, employment and willingness to buy durable goods. Readings of 50.0 point to neutrality. Values above 50.0 indicate optimism, while values below 50.0 are indicative of lack of confidence. In case the index rose more than projected, this might provide support to the local currency. Japans Cabinet Office is to release the official data at 5:00 GMT on Monday.

Industrial output – final estimate

The final estimate of the index of industrial production in Japan probably confirmed the preliminary data of a 0.6% contraction in November compared to a month ago, as reported on December 25th. In October output expanded at a monthly pace of 0.4%.

In annual terms, final industrial production probably also confirmed the preliminary estimate, pointing to a 3.8% drop in November. If so, this would be the most significant annual decline since June 2013, when production fell at a pace of 4.6%. Annualized industrial output contracted at a pace of 0.8% in October.

The index, reflecting business cycle, measures the change in overall inflation-adjusted value of output in sectors such as manufacturing, mining and utilities. In case industrial output shrank more than anticipated, this would mount selling pressure on the Japanese yen. The Ministry of Economy, Trade and Industry is to publish the official industrial data at 4:30 GMT.

Japanese retail Forex traders seen to lose appetite

According to Gaitame.com Research Institute Ltd., Japanese retail currency traders will probably lose appetite for trading, following the Swiss National Banks decision to give up the EUR/CHF minimum exchange rate on Thursday.

”It’s inevitable that investment appetite will shrink,” said Takuya Kanda, a senior researcher at Gaitame.com Research Institute, a unit of a Tokyo-based company that offers investors the chance to borrow money to fund their trades, cited by Bloomberg. ”There were quite a few people who got hit by the slides in euro-dollar, euro-yen as the euro plunged immediately after SNB’s decision.”

In Japan over-the-counter Forex trading totaled JPY 576 trillion (USD 4.9 billion) in November, as EUR/CHF trades accounted for JPY 380 billion and CHF/JPY cross accounted for JPY 343 billion, data compiled by the Financial Futures Association of Japan revealed.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 117.08. In case USD/JPY manages to breach the first resistance level at 118.34, it will probably continue up to test 119.04. In case the second key resistance is broken, the pair will probably attempt to advance to 120.30.

If USD/JPY manages to breach the first key support at 116.38, it will probably continue to slide and test 115.12. With this second key support broken, the movement to the downside will probably continue to 114.42.

The mid-Pivot levels for Monday are as follows: M1 – 114.77, M2 – 115.75, M3 – 116.73, M4 – 117.71, M5 – 118.69, M6 – 119.67.

In weekly terms, the central pivot point is at 117.60. The three key resistance levels are as follows: R1 – 119.38, R2 – 121.12, R3 – 122.90. The three key support levels are: S1 – 115.86, S2 – 114.08, S3 – 112.34.