Introduction

In this article USDJPY will be analyzed both fundamentally and technically and as known nothing is impossible in Forex so different scenarios will be drawn to express about the most probable scenarios with the USDJPY.

What is affected the move of USD/JPY nowadays:

Fundamental analysis:

USD/JPY is affected now by two different policies by both Bank of Japan (BOJ) and United States Federal Reserve (FED) and also affected strongly by BOJ quantitative easing which strongly hit Japanese Yen, finally Yen and other currencies is affected due to strong growth in US in the last months which make US$ to be favored.

Different policies by BOJ and FED:

In last Octeber,2014 BOJ Bank of Japan to inject 80 trillion yen into its economy “In a week when In a week when the US Federal Reserve announced it was calling time on bond buying program, the Bank of Japan moved in the opposite direction by increasing stimulus through an expansion of its quantitative easing (QE) program” (Source: theguardian).

In different, US FED is ready to raise interest rate for the first time from years, FED delayed its first rate hike more than once in order to prevent broad US$ gains which may dampen US growth, this time rate hike is very near but if something horrible hit markets again, rate hike may be delayed more.

Negative Japanese growth:

Japanese economy suffered for years from negative growth, world crises in 2008 made investors to but JPY currency as haven, this send USD/JPY strongly lower towards 75 in 2012 from 125 in 2007, this JPY strength hit Japanese exporting and Japanese economy suffered more.



Strong US growth:

US growth still so strong in last quarter as it growth increase 3.7% in last quarter VS 0.6% quarter before, last US growth Q/Q were as follows (4.6%, 4.3%, 2.1%, 0.6% and 3.7% last quarter), US growth momentum still accelerating and this growth is very supportive for US first rate hike.


Technical analysis:

USDJPY moved in last 11 months in a range between 115 and 125, after strong gains of the pair, this consolidation may mean that pair may be near to fall if lower range is broken, but in other side, it may be rest or relax area before more strong gains,
break lower 115 will open the door for strong looses for the pair which may send the pair towards 100-105, but break about 125 may open the door for 130.


Different scenarios:
  1. USDJPY will stay move between 115 and 125 without any break up or down, this scenario may have probability 60%, USDJPY moved between this range for 11 months and may be not able to break the range in the last 3 months of the year, this range may be broken when crisis happened in US or Japan or in stock market.
  2. USDJPY will break higher current range aiming 130, this scenario may have probability 25%, after consolidation of 11 months, pair may break higher if supported bu another boost in stock market or if Japan inject more QE or if US begin raising interest rate.
  3. USDJPY will break lower current range aiming 100-105, this scenario may have probability 15%, pair may break lower if collapse in stock market happen or if crisis hit any of both countries.
Conclusion:

USDJPY still affected by different BOJ and FED policies which supported strong gains for USD against Japanese Jen, technically pair consolidated in a range for 11 months, this consolidation may be sign of reversal or just as relax time before pushing up again.
Translate to English Show original