USD/JPY Predictions: Japan’s Trade Surplus Calls For Bullish Trend

Due to stalemate by investors, Asian trading sessions have not encountered any major changes which sees the usually vibrant USD/JPY currency pair remain at 109.10. This has been seen as a minor change compared to last week’s 109.50.

The Effects of US Retail Prices, Japan’s Machinery Orders And The Pandemic

Japan’s current trading activity and the new machinery orders are viewed as the major causes of this. On Tuesday, the pair reacted to the current economic situation of the United States. 

There has been a decline in sales in the USA since the month of July and this has resulted in slower momentum between the pair. There is also the case of a hike in prices which has made consumers reduce it’s retail activities significantly.

The retail sector of the United States is the biggest player in the country’s economy. This affects it’s GDP and helps measure the cost of consumer’s buying and selling activity. According to recent reports, the serious increment of industrial activity in the US has caused a small increase in value of the dollar. 

As the number of cases of the coronavirus continue to rise, the manufacturing sector has had its own share of trading effects. There have been new cases emerging from New Zealand and Australia and this has shown how the pandemic affects the increase in value of the US dollar. 

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Despite the aforementioned changes, the USD/JPY pair has not yet faced any significant changes. Also, there has been an increase in Japan’s trading exports as it continues to maintain momentum since April 2021. This is reported to be reading at 37%, which isn’t up to the expected 39% estimate.

The import sector sees Japan record just 28% of total importation compared to the 32% recorded just one month earlier. The import sector has proven to be the main reason for the country’s current improvement in trade surplus with over 441 billion Yen outperforming last year’s 384.

Analysing The Bullish Trend

At 1.5%, there have been high numbers of orders of machinery from Japan which beats the median estimate of -2.8%. The number of sales also faced a significant rise by 18.6%.

USD/JPY price chart Source TradingView

The Federal Reserve minutes will be out on Wednesday and investors will be waiting to find out how it affects the USD/JPY pair. This will also amount to deliberations by investors and analysts needed for predicting the pair’s next big move.

The USD/JPY pair is now experiencing a bullish move that is predicted to be maintained until the 110 price point. This is the price analysts and investors are planning to place their new resistance level and the MACD has also confirmed this move.

The strong trading numbers coming out of Japan is as a result of the rising import orders especially in its vibrant manufacturing machinery sector. This has resulted in a significant rise in trade surplus since the month of June and is expected to maintain this momentum for now as a bullish trend takes shape.

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