A Report on GDP of Japan May Have a Significant Impact on the Dynamics of the "Safe Haven" Currency

The key event this week will be a report on GDP of Japan, which will be published this Friday (02:50 GMT+3). Gross domestic product is a key indicator of the health of the country's economy, which has a strong impact on the exchange rate of the national currency.

Investors will carefully assess how sustainable the Japanese economy was in the first quarter of 2018 after a steady growth from the end of 2016. The preliminary data turned out to be rather weak. Experts expect that in the first three months of 2018, the country's economic growth will slow by 0.2%. The main question is whether the reduction in early 2018 will be a short-term phenomenon or not. According to the minutes of the last Bank of Japan meeting, the regulator expects stable growth of the country's economy during the current year. According to forecasts, starting from 2019, the growth of Japan GDP will temporarily slow down due to the consequences of the planned increase in the consumption tax.

Japan GDP Growth Rate
Source: tradingeconomics.com

It should be noted that this statistics may influence the views of the Bank of Japan representatives on the future fate of monetary policy. Earlier, the head of the Central Bank reported on the readiness to strengthen financial incentives, if the country's economic growth would slow down. We recommend paying attention to the difference between the actual and the forecasted values.

Let's consider the current technical pattern on the USD/JPY currency pair
  • Support levels: 109.500, 109.000, 108.500
  • Resistance levels: 110.000, 110.600, 111.350
EUR/USD Pattern

Currently, the USD/JPY quotes are consolidating near the "mirror" resistance level of 110.000, which is a 50% correction zone. Local support is at the level of 109.500. The trading instrument is tending potentially to reduce. The signals of the indicators are different. We recommend opening positions from the key levels.

If the price fixes below the local support of 109.500, it is necessary to consider selling USD/JPY. The immediate goal for profit taking is the round level of 109.000. The movement is tending to 108.500-108.150.

Alternative option. If the statistics on GDP of Japan turns out to be weak, the USD/JPY currency pair may again test the level of 110.600-111.000.

Confirmations and entry points to the market should be looked for on lower timeframes. When following positions, we recommend using a trailing stop.

by JustForex, 2018.06.06

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Open Account

Get Free Analytics

* required fields
Last Articles
All Articles
Best Gold Trading Tips For Beginners
Gold is one of the most popular assets traded worldwide by investors, funds, and speculators who aim to profit from the price fluctuations or stand up against inflation. Unfortunately, many market participants fail to catch the wave and take full advantage of what the gold market can offer due to the lack of knowledge and experience. Are you planning to become the next gold trader? Learn how to trade gold in the most profitable way.
Read more
How to Become a Successful Forex Trader in Malaysia
With broad access to online brokerage services, everyone can become a trader these days. However, few people actually find success in FX. The reason might be that many of those who try trading skip some essential steps or simply do things wrong. Learn about the best ways to become a currency trader in Malaysia from this article.
Read more
How to Become a Forex Trader in Indonesia
Starting trading currencies in Indonesia is as easy as in the rest of the world. All you need to do is spend a few minutes of your time on opening a trading account and going through the verification process. However, this is hardly enough to start making money, let alone make a living out of forex trading. To learn about the best ways to trade currency in Indonesia, read this article.
Read more