Fundamental Forecast for JPY: Neutral
Talking Points:
- Yen and US Dollar Aim Higher as Trade War Fears Swell Before G7[1].
- USD/JPY Technical Outlook: Decision Time for the Japanese Yen[2].
- If you’re looking for long-term analysis on the Yen, check out our Quarterly Forecast for the currency[3].
Want to see how other traders are approaching USD/JPY? Check out our IG Client Sentiment indicator[4].
USD/JPY With a Second Consecutive Weekly Doji
It was another mixed week for the Japanese Yen[5], as the currency put in another indecision formation on the weekly chart of USD/JPY[6]. This marks the second consecutive week of indecisive price action[7], and this happened even as a return of risk tolerance crept back into global markets[8], with both the Dow and S&P 500[9] setting fresh two-month highs while the Nikkei further recovered from the May sell-off.
USD/JPY Weekly Chart: Two Consecutive Weeks of Indecision
Chart prepared by James Stanley[10]
The big item this week out of Japan was the final read of Q1 GDP, which had previously indicated an annualized contraction of -.4%. GDP growth for last quarter was revised down to an annualized -.6%, and this is perhaps even more worrisome than initially thought as this contraction ended two consecutive years of GDP growth for Japan. The primary drag appeared to emanate from domestic consumption, and this comes from a continued lag in wage growth. Capital investment continues to grow, albeit at a moderate pace, and hopes are high that
