USD/JPY Price Forecast – US dollar finding support against yen on Tuesday

The US dollar has pulled back against the Japanese yen during the trading session on Tuesday but continues to find support at a vital round number now. Because of this, it looks as if the buyers are trying to make a statement.
The US dollar has pulled back early during Tuesday trading, but the ¥111 level has offered enough support to turn things around. The ¥111 level is psychologically important obviously, as it is a large, round, psychologically significant number. Overall, I think that the market will continue to rally, especially if we can get good news coming out of the trade war front, which seems to be calming down. With the agreement between the Mexicans and the Americans, that’s a good sign, so I think it’s only a matter of time before the US can pivot to the Chinese situation, perhaps working out some type of deal.
At that point, this pair will more than likely take off to the upside. In general, I think that if we do break down though, there will be buyers underneath and it will probably only be a matter of time before we rally towards the highs again. If we do break down, I think the “floor” in the market is near the ¥110 level, an area that has been important more than once. I think that the market should continue to be important and should attract a lot of attention. Overall, I think that the market could very well turn around and go towards the ¥112 level, then possibly the ¥113 level. Obviously, we need a little bit of good news to lift the market, which I think is coming sooner or later. However, if we break down below the ¥110 level, the market could unwind down to the ¥109 level.
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EUR/USD Resilience Accompanied by Shift in Retail Sentiment

The near-term rebound in EUR/USD appears to be losing steam as it snaps the series of higher highs & lows from the previous week, but a broader shift in market behavior appears to be taking shape as both price and the Relative Strength Index (RSI) threaten the bearish trends from earlier this year.
Even though the Federal Open Market Committee (FOMC) is widely expected to raise the benchmark interest rate in September, the central bank appears to have little to no interest in speeding up the normalization process as Chairman Jerome Powelltalks down the risk for above-target inflation.
In turn, the FOMC may opt for a dovish rate-hike on September 26 as ‘participants observed that if a large-scale and prolonged dispute over trade policies developed, there would likely be adverse effects on business sentiment, investment spending, and employment,’ and the U.S. dollar my exhibit a more bearish behavior over the remains of the year if Chairman Powell & Co. continue to project a neutral Fed Funds rate of 2.75% to 3.00%.
At the same time, the IG Client Sentiment Report shows 39.6% of traders are now net-long EUR/USD, with the ratio of traders short to long at 1.52 to 1 even though the exchange rate breaks the monthly opening range.In fact, traders have been net-short since August 21 when EUR/USD traded near 1.1575. The number of traders net-long is 1.7% higher than yesterday and 5.6% lower from last week, while the number of traders net-short is 2.3% higher than yesterday and 8.8% higher from last week.
The recent shift in retail positioning offers a contrarian view to crowd sentiment as there appears to be a more dynamic shift in trader behavior, with the topside targets still on the radar for EURUSD as bothprice and Relative Strength Index (RSI) threaten the bearish trends from earlier this year. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

EUR/USD DAILY CHARTImage of eurusd daily chart
The advance from the 2018-low (1.1301) may continue to gather pace as EUR/USDbreaks the monthly opening range, with a close above the 1.1640 (23.6% expansion) to 1.1680 (50% retracement) region raise the risk for a move back towards 1.1810 (61.8% retracement), which largely lines up with the July-high (1.1791).
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Euro Holds Monthly Support But Deeper Losses Likely Ahead

TECHNICAL FORECAST FOR THE EURO: BEARISH
Euro finished August narrowly avoiding monthly support break
Shorter-term chart setup argues for renewed downside pressure
Added further to short EUR/USD trade initiated near 1.24 mark.
The Euro narrowly avoided a break below monthly support near the 1.15 figure. Still, the decade-long down trend against the US Dollar remains very much intact as September gets underway. What’s more, nearer-term positioning suggests it may be just a matter of time before a breach opens the door for deeper losses.
The daily chart shows prices recoiling from resistance capping the upside since early June, paving the way for another challenge of support in the 1.1530-54 area. A daily close below that puts the August swing low back in the crosshairs.
Zooming in to the four-hour chart offers further confirmation and a greater sense of urgency as prices pierce below counter-trend support guiding the upswing from August lows and breach a secondary barrier marked by former resistance. That seems to set the stage for another challenge of the 1.15 threshold.
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USD/JPY Initiates Bearish Sequence Amid Failed Run at August-High

Fundamental Forecast for Japanese Yen: Bullish
JAPANESE YEN TALKING POINTS
The recent rebound in USD/JPY unravels following the failed attempt to test the monthly-high (112.15), but fresh data prints coming out of the U.S. economy may prop up the exchange rate as Non-Farm Payrolls (NFP) are projected to increase another 191K in August.
Keep in mind, Fed Fund Futures continue to reflect expectations for higher borrowing-costs, with market participants gearing up for a move in September and December, and a batch of positive developments may heighten the appeal of the U.S. dollar as it puts pressure on the FOMC to extend the hiking-cycle.

However, a set of lackluster data prints may drag on the greenback as Chairman Jerome Powell talks down the risk for above-target inflation, and central bank officials may continue to project a longer-run Fed Funds rate of 2.75% to 3.00% as ‘‘there does not seem to be an elevated risk of overheating.’ Until then, USD/JPY may continue to give back the advance from the August-low (109.77) following the failed attempt to test the monthly-high (112.15), with the exchange rate at risk of exhibiting a more bearish behavior over the coming days as it starts to carve a series of lower highs & lows.
Signs of a more robust labor market should keep the Federal Open Market Committee (FOMC) on track to further normalize monetary policy as the central bank largely achieves its dual mandate for full-employment and price stability, and Fed officials may ultimately prepare U.S. households and businesses for four rate-hikes in 2018 as the updates are also anticipated to show Average Hourly Earnings climbing to 2.8% from 2.7% in July.Failure to break the August opening range may produce range-bound conditions in USD/JPY, with the fresh series of lower highs & lows raising the risk for a move back towards the 109.40 (50% retracement) to 110.00 (78.6% expansion) region, which largely lines up with the monthly-low (109.77). Need a break below the stated region to open up the downside targets, with the next region of interest coming in around 108.30 (61.8% retracement) to 108.40 (100% expansion), which sits just above the May-low (108.11).
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Bitcoin – $7,300 the Line in the Sand for the Bulls

Bitcoin recovered from early losses this morning, while strong resistance at $7,300 continues to be a struggle for the Bitcoin bulls.
Bitcoin slipped by just 0.47% on Monday, partially reversing Sunday’s 1.43% gain, to end the day at $7,265.7, the trend of Monday losses resuming after having managed to kick off the previous week on the front foot.
In line with the broader market, Bitcoin slipped from a start of a day morning high $7,324.8 to an early morning intraday low $7,200 before finding support, the early reversal seeing Bitcoin steer clear of the day’s first major support level at $7,147.27.
Support through the late morning and early afternoon led Bitcoin through to an intraday high $7,369, the day’s high coming within reach of the 38.2% FIB Retracement Level of $7,376 before pulling back.
Selling pressure at the 38.2% FIB Retracement Level continues to pin Bitcoin back from more material gains, with a late in the day reversal seeing Bitcoin slide back to $7,200 levels to leave the extended bearish trend intact.
The lack of a major move through the day left the broader market on the defensive, in spite of the news wires being relatively quiet on the regulatory front, investors locking in profits at the start of the week in anticipation of more regulatory chatter through the month.
While the news wires were on the quieter side, the latest CFTC Commodity of Traders report showed that there was a reversal in the previous week’s rise in long positions, with long positions falling from 2,160 to 1,974, to give the bears a stronger grip, short positions rising from 3,426 to 3,446 according to the latest available report released on 31st August for data as at 28th August.
We can expect Bitcoin and the broader market to respond to the month end numbers once released, with any bounce back in the longs supporting another run at the 38.2% FIB Retracement Level of $7,376 and the beginnings of a near-term bullish trend.
At the time of writing, Bitcoin was up 0.21% to $7,282.7, with Bitcoin recovering from a dip to a morning low $7,255.4 to strike a morning high $7,298.5 before easing back, with resistance at $7,300 continuing to be a hurdle for the Bitcoin bulls following Monday’s moves.
While failing to break back through to $7,300 levels, leaving the day’s first major resistance level at $7,356.47 untested, the morning low also saw Bitcoin steer clear of the day’s first major support level at $7,187.47.
For the day ahead, holding above $7,278.23 would support another run at $7,300 levels to bring the day’s first major resistance level at $7,356.47 and the 38.2% FIB Retracement Level of $7,376 into play, though for Bitcoin to break out from the first major resistance level, the release of Friday’s CFTC long and short positions will need to be favourable.
Failure to hold above $7,278.23 through the morning could see Bitcoin hit reverse later in the day, with a pullback through the morning low $7,255.4 bringing sub-$7,200 levels and the day’s first major support level at $7,187.47 into play, with a further slide on the cards should short positions rise further, which could see Bitcoin test the day’s second major support level at $7,109.23 before any recovery.
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Gold Price Prediction – Gold Rallies as the Dollar Eases

Gold prices rebounded on Wednesday but were unable to recapture resistance near the 10-day moving average.  The dollar lost ground on Wednesday as yields edged lower despite Tuesday’s much stronger than expected US ISM manufacturing report.  Traders now await Thursday’s ADP private payroll report, and Friday’s BLS government payroll report which is expected to show a 190K increase in total jobs created in the United States. A wider than expected trade deficit weighted on the greenback, and put pressure on riskier assets, which help buoy gold prices.
Technical Analysis

Gold prices edged higher but were unable to break through resistance at 1,199. Support on gold prices is seen near the August lows at 1,160.  Positive momentum is decelerating as the MACD(moving average convergence divergence) histogram is printing in the black with a declining trajectory which points to consolidation. The fast stochastic is moving lower, and reflects accelerating negative momentum. The index generate a crossover sell signal in oversold territory last week which also points to lower prices.
Trade Deficit Increases to Widest in 5-months
The Commerce Department reported that the US trade deficit increased by 9.5% to $50.1 billion in July, widening for a second straight month. Data for June was revised lower to show the trade deficit rising to $45.7 billion. The trade deficit with China surged to 10% to a record of 38.8 billion.  The decline in soybean exports was one of the catalysts for the drop. Expectations were for the deficit to actual increase more to 50.3 billion in July. The widening of the deficit has been driven by the trade spats that the United States is having with Canada, Mexico, the EU and China. One positive for gold is that the dollar turned around after strengthening on Tuesday. Since gold is priced in dollars, a strong US currency makes gold more expensive in other currencies.
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The USD in the Hot Seat, with Trade War Chatter and NFP Data in Focus

While the Aussie Dollar continues to get hit in spite of better than expected stats through the week, focus will be on trade and U.S stats later today.
Earlier in the Day:
Economic data released through the Asian session this morning included July household spending figures out of Japan and July home loan data out of Australia.
For the Japanese Yen, household spending came in better than expected, with a 0.1% rise year-on-year, which was better than a forecasted 0.8% fall, following June’s 1.2% slide.
The 0.1% rise in spending was attributed to a 13.3% rise in spending on education, a 10% rise in spending on transportation and communication and a 4.8% rise in spending on medical care.
The biggest drag on spending were a 10.3% slide in spending on clothing & footwear, a 1.7% fall in spending on food, a 1.4% fall in spending on housing and a 1.3% fall in spending on furniture and household utensils.
Household income fell by 1.6%, with disposable income falling by 2% year-on-year, weighing on outlook for spending in the months ahead.
Month-on-month, spending fell by 1.1%, which was better than a forecasted 1.2% decline following June’s 2.9% rise.
The Japanese Yen moved from ¥110.58 to ¥110.473 against the Dollar upon release of the figures, before easing to ¥110.6 at the time of writing, up 0.14% through the early part of the session.
For the Aussie Dollar, home loans rose by 0.4% in July, coming in ahead of a forecasted 0.1% decline following June’s revised 0.8% fall, according to figures released by the ABS.
Owner occupied housing loans rose by 1.3%, partially offset by a 1.3% slide in investment housing loans.
The number of finance commitments for the purchase of new dwellings for owner occupation fell by 2.2% in July, following a 4.7% slide in June.
The number of finance commitments for the purchase of established dwellings for owner occupation rose by 0.6%, following a 1% fall in June.
The Aussie Dollar moved from $0.71826 to $0.71896 upon release of the figures, before easing to $0.7188 at the time of writing, down 0.17% for the session.

In the equity markets, it was another mixed start to the day, with the Nikkei tumbling by 1.1% early in the session, weighed by the jump in the Japanese Yen back to ¥110 levels and the tech sell-off in the U.S, with the ASX200 heading for a 7th consecutive day of losses, down 0.66% at the time of writing. For the CSI300 and Hang Seng, there were some minor gains at the start of the day, the pair up 0.57% and 0.01% respectively, some support coming off the back of particularly heavy losses through the week.
The Day Ahead:
For the EUR, economic data scheduled for release this morning includes finalized 2nd quarter GDP numbers for the Eurozone, together with July industrial production and trade data out of Germany.
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Australian Dollar Gains On NAB Business Confidence, Jobs Data Next

AUSTRALIAN DOLLAR, NAB BUSINESS CONFIDENCE SURVEY TALKING POINTS:
NAB’s business confidence survey was quite gloomy for August
The fall of former PM Malcolm Turnbull probably didn’t help, but confidence was notably weak
Still, the current conditions assessment was much better.The Australian Dollar managed to rise Tuesday, paring earlier losses as investors apparently chose to focus on the positives from an objectively mixed business survey.
Overall business confidence declined in August, according to the National Australia Bank’s roundup. Its index fell to 4, from a prior reading of 7. This was also the lowest reading since late 2016. However, firms’ assessment of business conditions rose, hitting 15 from a previous, upwardly revised 13.
A knock to confidence is hardly surprising given that a Prime Minister left office in August. Malcolm Turnbull was ousted over a lack of confidence in his leadership, adding to the considerable churn in Australia’s top political post. There have now been seven Prime Ministers in just over eleven years.
Still, NAB said that business was still performing strongly and that strong employment growth was likely in the months ahead. This optimism perhaps explains AUD/USD’s response.
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Upbeat Australia Employment to Fuel Larger AUD/USD Rate Recovery

TRADING THE NEWS: AUSTRALIA EMPLOYMENT CHANGE
A batch of positive developments may trigger a bullish reaction in the Australian dollar as it instills an improved outlook for growth and inflation, and signs of a more robust economy may encourage the Reserve Bank of Australia (RBA) to gradually change its tune ahead of 2019 as ‘members continued to agree that the next move in the cash rate would more likely be an increase than a decrease.’
As a result, a marked rebound in Australia Employment may curtail the recent weakness in AUD/USD, but another below-forecast print may fuel fresh yearly lows in the aussie-dollar exchange rate as market participants push out bets for an RBA rate-hike.
Australia unexpectedly shed 3.9K jobs in July, with the Unemployment Rate narrowing to 5.3% from 5.4% per annum in June as the Participation Rate slipped to 65.5% from 65.7%. Despite the below-forecast print, a deeper look at the report showed a 19.3K expansion in full-time positions was offset by a 23.2K decline in part-time employment.
The Australian dollar gained ground despite the mixed data prints, with AUD/USD bouncing back from a low of 0.7214 to close the day at 0.7260
Broader outlook for AUD/USD remains tilted to the downside as both price and the Relative Strength Index (RSI) preserve the bearish trends from earlier this year, but the series of failed attempts to close below the 0.7090 (78.6% retracement) to 0.7110 (78.6% retracement) region raises the risk for a larger recovery as the exchange rate snaps the series of lower-highs carried over from the previous week.
A closing price above the 0.7170 (23.6% expansion) to 0.7230 (61.8% expansion) region to bring the 0.7230 (61.8% expansion) hurdle on the radar, which largely lines up with the monthly-high (0.7236).
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AUD/USD and NZD/USD Fundamental Weekly Forecast – RBA Minutes, New Zealand GDP on Tap This Week

The Australian and New Zealand Dollars could start the week under pressure due to reports of additional U.S. tariffs on China. The Wall Street Journal reported Saturday, citing individuals familiar with the matter that President Trump is planning to impose a fresh round of tariffs targeting about $200 billion in Chinese goods.
The Australian and New Zealand Dollars rose last week. The currencies were driven higher by a weaker U.S. Dollar. The catalysts behind the bullish price action were optimism over U.S.-China trade relations and weaker-than-expected U.S. producer and consumer inflation data.
For the week, the AUD/USD settled at .7155, up 0.0049 or +0.69% and the NZD/USD finished at .6546, up 0.0012 or +0.19%.
The Aussie was also supported by strong domestic employment data. The government reported the Australian economy added 44,000 jobs in August in seasonally adjusted terms, well above forecasts of an 18,000 gain. Overall participation levels edged higher, which left the unemployment rate steady at 5.3%. Quarterly data on the underemployed, fell by 0.3% to 8.1%.
The good news helped drive up Australian bond yields which made the Australian a more attractive investment, at least temporarily. However, it was not good enough to sway Reserve Bank of Australia policy. The fall in underemployment is considered a positive sign, but the RBA is waiting for consistent growth in wages before it will consider a rate hike.
The AUD/USD and NZD/USD gave back some of its gains on Friday in reaction to rising U.S. Treasury yields ahead of a widely expected Fed rate hike later this week. The price action was driven by upbeat U.S. retail sales and consumer confidence reports. A report that President Trump told his aides to proceed with tariffs on about $200 billion worth of Chinese imports also rattled investors.
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AUD/USD Rallies After Release of House Prices Data, RBA Minutes

TALKING POINTS – AUD/USD, RBA, EQUITIES, TRADE WARS
AUD/USD pares losses after mostly in-line housing inflation data, September RBA minutes
However, AUD/USD is still engaged in downside momentum near Dec 2016 support levels
US-China tariffs, equities’ performances, and Fed rate decision in the spotlight next two weeks
The Australian Dollar strengthened against its US namesake after local economic data crossed the wires early into Tuesday’s Asia Pacific trading session. Second quarter year-on-year housing inflation came in at -0.6%, a slight uptick from economists’ forecasts of -0.7% and a decrease from the 2.0% prior. The gauge measured quarterly was -0.7% in line with both the estimate and previous figure of -0.7%. AUD/USD’s ascent helped pare losses sustained earlier in response to the Trump administration announcement of 10% tariffs on $200B worth of Chinese goods, rising to 25% in 2019.
The rise in Aussie Dollar was further compounded by the release of the Reserve Bank of Australia’s September 4th meeting minutes. The central bank noted that while there was no strong case for near-term adjustment in policy, the next move in the cash rate is more likely to be an increase. The monetary authority also stated that while risks remain from uncertainty abroad and low wages growth, the modest decline in the Australian Dollar has been helpful for domestic growth.
As the RBA highlighted, the sentiment-linked unit has been steadily weakening against the US Dollar for the majority of 2018. Recently, the pair broke May/December 2016 support levels near the 0.716 figure, but slightly reversed its bearish momentum. AUD/USD traders should look to signs of possible RSI divergence and confirmation by breaking the downtrend channel before next moves.Looking forward, the Aussie Dollar faces a relatively light docket of local economic data, with job vacancies and private sector credit figures coming out in the next two weeks. Rather, the pro-risk unit will be closely watching the implementation of US tariffs on $200B of Chinese goods on September 24thand equities’ weak performances, possibly driving the currency lower. Furthermore, AUD/USD traders should also pay attention to factors moving the greenback, specifically the release of US PMI figures and the Federal Reserve’s rate decision.
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The Week Ahead – Geo-Politics and the FED to Drive the Markets

A choppy week ahead, with Trump at the UN, Theresa May at Tory Party Conference and the FED delivering a rate hike and projections.
On the Macro
For the Dollar, it’s a busy week ahead on the data front, key stats due out including September consumer confidence numbers on Monday, finalized 2nd quarter GDP numbers and August durable goods orders on Wednesday, with the FED’s preferred core PCE price index figures, personal spending numbers and finalised September consumer sentiment numbers due out on Friday. While we will expect consumer confidence, inflation and personal spending to be the key drivers on the data front, the FED and Trump are also in action. One other thing to consider is housing sector numbers due out, a market view being that the housing sector may well be the U.S economy’s early warning system. The Dollar Spot Index ended the week down 0.76% to $94.206.
For the EUR, while a relatively quiet week on the data front, key stats that will influence the EUR include business expectations figures on Monday, consumer confidence and unemployment numbers out of Germany on Thursday and Friday, with August retail sales and prelim September inflation numbers unlikely to have a material influence. Thursday’s release of the ECB Economic Bulletin will also need to be considered. The EUR/USD ended the week up 1.07% to $1.1749.
For the Pound, stats include August CBI industrial trend orders on Monday and finalized 2nd quarter GDP and business investment figures on Friday. While the numbers will have some influence, it’s going to come down to Brexit chatter through the week, with the release of the BoE Financial Stability Report on Monday also there for consideration. The GBP/USD ended the week up 0.03% to $1.3072.
For the Loonie, stats through the week are limited to July wholesale sales on Monday and July GDP and August RMPI numbers on Friday, the GDP number the key driver, though it may all boil down to NAFTA. The Loonie ended the week up 0.92% to C$1.2916 against the U.S Dollar.
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