USD/JPY: Weekly Trading Analysis For November 3-7, 2014

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Fundamental Analysis:

The US dollar gained tremendous strength against the Japanese Yen in last weeks trading session, Apparently the Japanese Yen came under broad selling pressure after the BOJ said it would raise its monetary base target to an annual increase of ¥80 trillion from ¥60-70 trillion, a preemptive move to steer the economy away from deflationary decline while improving the chances of reaching inflation goals.

Adding to pressure, a Japanese government panel overseeing the Government Pension Investment Fund approved plans on Friday for the fund to raise its holding of foreign stocks to 25% of its portfolio from 12%.

Friday’s changes to Japanese monetary policy caught many investors off guard and sent the dollar soaring over the yen and most other currencies as well.


Meanwhile on Thursday, the Federal Reserve wound up its quantitative easing program and said it was confident the U.S. economic recovery would continue. The Fed said targets for inflation and a reduction in unemployment were on track, but added that interest rates would remain close to zero for a “considerable time”.

The U.S. central bank said that although the jobs market is strengthening, there is still room for improvement, but not “significant improvement,” as it has said previously, in the labor market participation rate.

“The Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability,” the Fed said.



Technical Analysis:

Weekly bias remains on the upside as 21 and 55 EMA are crossed up on the 1 hour, 4 hours, Daily, weekly and Monthly charts signalling the continuation of the ongoing bullish trend. Also SSRC (stochastic), RSI and MACD shows bullish momentum is intact. However the market seems to be over-bought and i suggest buying the dips by waiting for a decent pull back around the 110.760(23.6 Fibonacci). Am expecting a rally of price to 114.000/115.000 psychological zones.


This week is going to be a busy fundamental week as investors would be closely monitoring some key important economic events from the US which includes US ISM Manufacturing PMI, ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI and most of all the Almighty Non Farm Employment Change and Unemployment Rate.

On Wednesday investors would also want to hear what BOJ Gov Kuroda would have to say about the Japanese econm

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