Forex Market: USD/JPY daily trading forecast

Friday’s trade saw USD/JPY within the range of 120.34-120.99. The pair closed at 120.58, dipping a mere 0.02% on a daily basis. It has been the first drop in the past five trading days. In weekly terms, the cross was up 1.33%, following three consecutive weeks of declines. It has been the steepest weekly gain since the week ended on May 31st, when the pair appreciated 2.13%.

At 8:43 GMT today USD/JPY was down 0.39% for the day to trade at 120.14. The pair touched a daily low at 120.10 at 8:40 GMT, or the lowest since September 10th.

No relevant macroeconomic reports and other events, which may influence USD/JPY trading, are scheduled for today.

Correlation with other Majors

Taking into account the week ended on September 13th and the daily closing levels of the major currency pairs, we come to the following conclusions in regard to the strength of relationship:

USD/JPY to AUD/USD (0.8981, or very strong)
USD/JPY to GBP/USD (0.8376, or very strong)
USD/JPY to EUR/USD (0.7650, or strong)
USD/JPY to NZD/USD (0.4538, or moderate)
USD/JPY to USD/CAD (-0.3142, or moderate)
USD/JPY to USD/CHF (-0.5823, or strong)

1. During the examined period USD/JPY moved almost equally in one and the same direction with AUD/USD and GBP/USD.

2. USD/JPY moved strongly in the opposite direction compared to USD/CHF during the past week, while moving strongly in one and the same direction with EUR/USD.

3. The correlation between USD/JPY and NZD/USD, USD/JPY and USD/CAD was moderate during the period in question.

Bond Yield Spread

The yield on Japan’s 2-year government bonds climbed as high as 0.019% on September 11th, or matching the high from the prior two trading days, after which it closed at the exact same level to gain 0.004 percentage point for the day.

The yield on US 2-year government bonds climbed as high as 0.742% on September 11th, after which it fell to 0.709% at the close to lose 2.8 basis points (0.028 percentage point) for the day, while marking a second consecutive trading day of decrease.

The spread between 2-year US and 2-year Japanese bond yields, which reflects the flow of funds in a short term, shrank to 0.690% on September 11th from 0.722% during the prior day. The September 11th yield spread has been the lowest one since September 3rd, when the difference was 0.678%.

Meanwhile, the yield on Japan’s 10-year government bonds climbed as high as 0.367% on September 11th, or matching the high from a day ago, after which it slipped to 0.354% at the close to lose 1.3 basis points (0.013 percentage point) on a daily basis.

The yield on US 10-year government bonds climbed as high as 2.226% on September 11th, after which it slipped to 2.187% at the close to lose 4 basis points (0.04 percentage point) on a daily basis. It has been the first drop in the past five trading days.

The spread between 10-year US and 10-year Japanese bond yields narrowed to 1.833% on September 11th from 1.860% during the prior day. The September 11th yield difference has been the lowest one since September 8th, when the spread was 1.816%.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for USD/JPY are presented as follows:

R1 – 120.64
R2 – 120.70
R3 (range resistance – green on the 30-minute chart) – 120.76
R4 (range breakout – red on the 30-minute chart) – 120.94

S1 – 120.52
S2 – 120.46
S3 (range support – green on the 30-minute chart) – 120.40
S4 (range breakout – red on the 30-minute chart) – 120.22

By using the traditional method of calculation, the weekly pivot levels for USD/JPY are presented as follows:

Central Pivot Point – 120.19
R1 – 121.74
R2 – 122.89
R3 – 124.44

S1 – 119.04
S2 – 117.49
S3 – 116.34