2) EURJPY

Technical Analysis (MA, RSI, STOCH, MACD, ADX)

• M30 - DOWN
• H1 - DOWN
• H4 - RANGE
• D1 - UP
• W1 - UP
• MN - UP

• Resistance: 131.50, 132.50, 133.60
• Support: 129.60, 128.00, 127.50

The first week of 2022 is marked by strong demand for risky assets, which of course puts strong pressure on the safe yen. It is too early to talk about a change in sentiment, however, the value of the Fear-Greed indicator indicates that the Risk-ON phase is already, and the value for the total for yesterday remained at the level of 68.

The market seems to be overcoming fears of the Omicron strain. To date, several studies have shown that while Omicron is indeed more infectious than the previously dominant Delta and better able to “evade the protection” afforded by vaccines, it also causes, on average, milder illness. Reducing the risk of hospitalization is critical in the medium to long term, as a strain that is more infectious but causes less severe disease may ultimately end the pandemic as herd immunity can be achieved more quickly without harming the health system.
However, governments around the world have recently begun to resort to new restrictions, as in the short term, a sharp increase in the absolute burden on Omicron's treatment poses a threat to healthcare infrastructure, even if a very small fraction of these cases require hospitalization.

Yesterday, the Japanese press reported that the Japanese government is planning to declare a state of emergency in Okinawa Prefecture due to the spread of COVID.

In terms of macro data, only Germany yesterday released retail sales data for November, which rose 0.6% mom, much better than the -0.5% expected. Also, the head of the Bank of France and member of the governing council of the ECB, François Villeroy de Galhau, said that he expects inflation in the eurozone to peak in the coming months and fall below 2% by the end of 2022.

The overall depreciation of the Japanese Yen is also strongly influenced by the policy of controlling the yield curve of Japan's government bonds. The yield on Japan's benchmark 10-year government bonds remained close to zero.

Further this week, we are watching Friday and the publication of fresh data on consumer inflation in the EU.

The fundamental picture continues to be more bullish, the downward movement was solely responsible for the demand for protection, which, as we see since the beginning of the year, has practically disappeared. The main drivers of the currency pair's growth are the position of BoJ in relation to the national currency and the definitely softer monetary policy of BoJ.

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