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USD/JPY Fundamental Weekly Forecast

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  • USD/JPY Fundamental Weekly Forecast

    Looking for Initial Upside Spike in Reaction to Trade Talk Decision

    Last week, the USD/JPY settled at 107.929, up 0.619 or +0.58%.

    I expect the initial reaction to the news to be bullish for the Dollar/Yen. Iím expecting firm U.S. Treasury yields which should drive up demand for the U.S. Dollar. Demand for risky assets should also be stronger.

    Whether the rally in the USD/JPY and the other markets continues much beyond the potential initial spike to the upside in prices will be determined by how concerned investors are about the chances of an actual deal to end the trade dispute between the economic powerhouses. The stronger their convictions, the higher prices should rise.

    There are no major reports from Japan this week, but investors will be locked in on Fridayís U.S. Non-Farm Payrolls report. A bullish report could encourage the Fed to hold rates steady at their meeting in late July and this could be bullish for the USD/JPY.

    Watch the volume and volatility this week because Thursday, July 4 is a U.S. bank holiday. This could skew the price action especially if investors decide to take to the sidelines until Monday, July 8.