USD/JPY Forecast Oct. 14-17

The Japanese yen lost ground last week, as USD/JPY jumped about 130 points. The pair closed the week at 98.57. This week’s schedule is very light, with just two releases. Here is an outlook on the major market-movers and an updated technical analysis for USD/JPY.
US consumer sentiment and unemployment claims were weak, but the yen couldn’t take advantage. The shutdown in the US continues, but the dollar was unaffected as the markets seem to be patiently waiting for the politicians in Washington to get their act together.
USD/JPY daily chart with support and resistance lines on it. Click to enlarge: 

1. Revised Industrial Production: Tuesday, 4:30. This manufacturing indicator bounced back from a sharp decline in August, posting a solid gain of 3.4% in September. This beat the estimate of 3.4%. It was the best reading from the indicator since January 2012. The markets will be looking for another strong reading this week.
2. BOJ Governor Haruhiko Kuroda: Friday, 6:35. Kuroda will be speaking at an event in Tokyo. Analysts will be listening closely for any hints as to the BOJ”s future monetary policy, and a speech which is hawkish is bullish for the yen.

* All times are GMT
USD/JPY Technical Analysis

USD/JPY started the week at 97.28. The pair dropped to a low of 96.56, breaking through support at 96.59 (discussed last week). USD/JPY then reversed direction, climbing all the way to 98.60. USD/JPY closed the week at 98.57.

Live chart of USD/JPY:

Technical lines from top to bottom

We begin with resistance at the round number of 104. This was a key line back in May 2008. At that time, USD/JPY was in the midst of a rally which saw the pair climb as high as 110.
102.50 was an important resistance line in late May but has not been tested since that time.
101.44 was the post-crisis high seen in April 2009, and has not been tested since mid-July. 100.85 saw activity in July as the dollar showed strength.
The significant 100 line saw some activity in September and continues to provide resistance.
98.90 held firm for a second straight week as the pair gained ground. It starts off the new weak as weak resistance and looks to be tested if the dollar continues to gain ground.
97.80 is providing USD/JPY with support. The line was breached by the pair early in the week but remains intact.
96.59 continues to provide support. It has some breathing room as the pair trades at higher levels.
Next is the round number of 95, a psychologically significant line. This line has held firm since mid-June.
93.79 marked the low point of a rally by USD/JPY which started in mid-June and saw the pair climb to the mid-101 range in July.
The final support level for now is 92.88, which last saw activity in April.
I am neutral on USD/JPY
The dollar had a good week, despite the political crisis in Washington. However, we could see some strong volatility in the currency markets this week as the debt ceiling will be reached on Oct. 17 if there is no agreement on Capitol Hill. With no major releases until late in the week, the markets will be focused on the shutdown and debt ceiling.