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February 22, 2021

JPY Weekly Forecast – Eyes on Safe-Haven Flows

 Not a lot of top-tier releases from Japan this week, which means that yen traders will likely take their cues from market risk sentiment.


Thinking about trading the safe-haven this week?


Check out the potential catalysts that might affect its prices!


Lower-tier economic reports

  • BOJ’s core CPI (Feb 24, 5:00 am GMT) last printed at -0.1%
  • Leading indicators index (Feb 25, 5:00 am GMT) to dip from 96.1 to 94.9 in January
  • Tokyo’s core CPI (Feb 25, 11:30 pm GMT) expected at -0.2% in February
  • Preliminary industrial production (Feb 25, 11:50 pm GMT) could improve from -1.0% to 3.0%, with the annual figure rising from -2.6% to -2.0% in February
  • Retail sales (Feb 25, 11:50 pm GMT) seen falling by 2.5% after 0.3% dip in December

Overall risk appetite

  • USD/JPY is vulnerable to U.S. Treasury yields volatility and traders’ reaction to Powell’s semi-annual testimonies and Uncle Sam’s second GDP reading
  • Unless we see market-changing themes pop up, the safe-haven yen will likely lose more pips to the vaccine, stimulus, and global growth optimism

Technical snapshot

  • Bollinger Bands suggest that JPY is “oversold” against AUD and NZD on the daily time frame
  • JPY is also nearing oversold conditions against GBP, CAD, and EUR
  • Simple moving averages show the yen’s short and long-term bearish trends against most of its counterparts
  • The yen is seeing short-term demand against its fellow safe-havens
  • The yen saw the most volatility against the comdolls and the pound in the last seven days