Forex Market: USD/JPY daily forecast

During yesterday’s trading session USD/JPY traded within the range of 102.22-102.50 and closed at 102.31.

At 11:22 GMT today USD/JPY was losing 0.3% for the day to trade at 102.02. The pair touched a daily high at 102.09 at 6:10 GMT, breaching the first key resistance.

Fundamental view

United States’ annualized index of producer prices (PPI) probably jumped 2.4% in May, according to the median estimate by experts, after adding 2.1% in the previous month. This index reflects the change in prices of over 8 000 products, sold by manufacturers during the respective period. The PPI differs from the CPI, which measures the change in prices from consumer’s perspective, due to subsidies, taxes and distribution costs of different types of manufacturers in the country. In case producers are forced to pay more for goods and services, they are more likely to pass these higher costs to the end consumer. Therefore, the PPI is considered as a leading indicator of consumer inflation. Higher than expected producer prices would have a bullish effect on the greenback.

At the same time, nation’s annualized core PPI, which excludes prices of volatile categories such as food and energy, probably rose 2.2% in May, following a 1.9% gain in the previous month. This indicator is quite sensitive to changes in aggregate demand, thus, it can be used as a leading indicator for the economy. However, because of its restrained scope, it is not suitable for future inflation forecasts.

The US Bureau of Labor Statistics is expected to publish the official PPI readings at 12:30 GMT. Higher-than-expected readings would support greenback’s demand.

In addition, the monthly survey by Thomson Reuters and the University of Michigan may show that the preliminary reading of the US consumer confidence improved to 83.0 in June from a final reading of 81.9 in the previous month. The survey encompasses about 500 respondents throughout the country. The index is comprised by two major components, a gauge of current conditions and a gauge of expectations. The current conditions index is based on the answers to two standard questions, while the index of expectations is based on three standard questions. All five questions have an equal weight in determining the value of the overall index.

In case the gauge of consumer sentiment showed a larger improvement than projected, this would boost demand for the dollar. The official reading is due out at 13:55 GMT.

Technical view

According to Binary Tribune’s daily analysis, in case USD/JPY manages to breach the first resistance level at 102.04, it will probably continue up to test 102.35. In case the second key resistance is broken, the pair will probably attempt to advance to 102.57.

If USD/JPY manages to breach the first key support at 101.51, it will probably continue to slide and test 101.29. With this second key support broken, the movement to the downside will probably continue to 100.98.