Forex Market: USD/JPY trading outlook for Monday

Friday’s trade saw USD/JPY within the range of 103.56 – 104.12. The pair closed at 104.09, gaining 0.35% on a daily basis and 0.13% for the week. On a Monthly basis, the US dollar gained 1.3% against the Japanese currency.

Fundamental view

The lack of data from the US on Monday, due to the Labor Day holiday, will cause the currency pairs movements to be largely influenced by data from Japan.

Due at 23:50 GMT on Sunday, Japans Ministry of Finance is expected to report that capital spending surged by an annualized 3.8% in the second quarter, compared to 7.4% in the previous three months.

Capital spending measures the change in the total value of capital expenditures by companies. It is deemed as a leading indicator of business conditions and Japans economic health. Thus, a higher reading implies that the Asian economy is faring well, which heightens demand for the national currency and raises its value. Negative or worse-than-expected readings, therefore, are generally seen to spur bearish sentiment towards the yen.

Later on Monday, Markit Economics, in collaboration with Japan Materials Management Association, will report on the Asian economys factory growth in August. According to analysts estimates, Japans manufacturing sector expanded this month, with the corresponding Final Markit/JMMA Manufacturing Purchasing Managers Index expected to have risen to 52.4 from 50.5 in July. If confirmed, it would match a preliminary reading released on August 21st. Readings above the level of 50 indicate an expansion in the respective sector, and vice versa.

Technical view

According to Binary Tribune’s daily analysis for Monday, the central pivot point for the pair is at 103.96. In case USD/JPY manages to breach the first resistance level at 104.24, it will probably continue up to test 104.39. In case the second key resistance is broken, the pair will probably attempt to advance to 104.67.

If USD/JPY manages to breach the first key support at 103.81, it will probably continue to slide and test 103.53. With this second key support broken, movement to the downside will probably continue to 103.38.

The mid-Pivot levels for today are as follows: M1 – 103.46, M2 – 103.67, M3 – 103.89, M4 – 104.10, M5 – 104.32, M6 – 104.53.

In weekly terms, the central pivot point is at 103.97. The three key resistance levels are as follows: R1 – 104.39, R2 – 104.69, R3 – 105.11. The three key support levels are: S1 – 103.67, S2 – 103.25, S3 – 102.95.