6 Month Low Flash PMI Makes Yen Turn Weak

Japanese YenOn 11th of May 2017, we informed our readers to opt for a short position in the currency pair USD/JPY near 114.40 with a target of 111.20. We also notified the traders to but a put option in the binary options market.

As we have forecasted, the currency pair USD/JPY has fallen low of 110.23 within a time period of 1 week. This, in turn, has resulted in profit from the traders of Forex and binary options market.

Now, the currency pair has gained some amount of ground and is currently trading around 111.60. We are hopeful that the pair is going to consolidate and rise further in the coming week because of the facts mentioned herewith.

On Tuesday, the IHS Markit in Japan has reported a six-month low flash manufacturing Purchase Manager Index reading of 52 in the month of May as compared to a reading of 52.7 in April. The analysts were expecting the PMI for May to be 52.9. Also, since November the job creation has dipped to its lowest level.


Mickey Levy who is the chief economist at Berenberg Capital Markets in New York has said that the business and consumer confidence is quite high. Based on the minutes of the FOMC meeting that was conducted on 2nd May, he has pointed out that a rate hike in the month of June is highly probable.

It is to be noted that unemployment recorded a low of 4.4% last month which is better than the estimated figure of 4.7%. Unemployment is at its lowest sustainable level now. Based on the job data, members of the rate-setting committee, Loretta Mester of Cleveland and Boston Fed Chief Eric Rosengren have warned that the USA might fail in its fight against the rising inflation if the quarterly rate hikes are postponed.

Patrick Harker who is the head of Philadelphia Fed has a speech at Drexel University and said that a strong economic activity is anticipated in the rest of the year. He further said that the seasonal factors attributed to the economic weakness in the first quarter. In addition to this, Harker speculates of 2 hikes this year based on the strength of the economy and strong employment data. Hence, the market is looking forward to beginning to price in a rate hike which in turn can make Greenback bullish against Yen.

Technically, the currency pair is moving up its 32 periods (H4) moving average. The MACD indicator is likely to cross the zero line by moving upwards. It clearly indicates a rise in the buying pressure. So, it is likely that Greenback is going to rise.

USD/JPY Pair: May 25th 2017

USD/JPY Pair: May 25th, 2017

In the Forex market, a trader can create a long position near 111.30 and place stop order below 110.20. As anticipated, if the pair moves up, the trader needs to exit near 113.50.

Alternatively, the trader can purchase a call option and select the expiry period of 1 week. A strike price of around 111.30 would be a perfect entry level.

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