2) EURJPY

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

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

• Resistance: 129.50, 130.00, 131.50
• Support: 128.00, 127.50, 127.30

Yesterday the currency pair was once again traded practically out of place, again the support level of 128.00 kept the currency pair from continuing to move down. While the demand for protection at the moment has grown, making the safe Yen more popular. Demand for protection has risen after the announcement of the first recorded death from CVOID Omicron in the UK. Fear has returned to the market ahead of key central bank meetings, the Fear-Greed indicator has declined and points to 29 for yesterday's total.

Neither Japan nor the EU released any macro data yesterday.

Questions around the COVID situation remain and new ones are added. Despite growing evidence that the symptoms of the new Omicron strain are less pronounced, the UK government's tone about the rate of infection with this variant is becoming increasingly alarming. Confirmation that the UK's first death related to Omicron had occurred also did not improve sentiment, as the lack of details about the circumstances of the death only increased the general uncertainty and fear. Omicron will become the dominant strain in the country in the next 48 hours, according to the UK Department of Health. Additional restrictions continue to be imposed around the world in connection with Omicron. In the USA, in the state of California, the mandatory wearing of masks has been introduced. Australia has the highest daily viral infection rates in over two months. COVID concerns have pushed G7 finance ministers and central bank governors to commit to doing more to tackle the pandemic. In addition, the Asian Development Bank (ADB) cut its growth forecasts for developing Asia for the same reason.
The Omicron story is also relevant in China. Against the background of the detection of a new strain in China, there is now a real chance to see a complete lockdown of China's production centers in Zhenjiang.

The real estate market in China also continues to bounce back. Zhang Chao, a researcher at the Taihe Analytical Center, said yesterday that the debt restructuring process is underway and the debt crisis will gradually be resolved. But if a company like Evergrande continues to develop in line with its original business concept even after restructuring its debt, it will still remain a 'malignant tumor' for China's economic development and a major potential risk for the entire industry. In his opinion, the situation with Evergrande once again sends an alarming signal to companies that develop their business on the basis of a large amount of borrowed funds.

The Bank of Japan announced today that it will channel a total of US $ 97 billion in temporary purchases of government bonds over two days to counter short-term interest rate hikes. This practice is certainly not new, but it can lead to a very strong rise in Japanese stock indices and to additional pressure on the Yen. We are monitoring additional data.

This week, market participants will closely monitor the official position of the central banks of the EU and Japan on December 16 and 17.

Thursday:
- Decision on ECB interest rate (Dec)
- ECB press conference

Friday:
- Bank of Japan Monetary Policy Report
- Press conference of the Bank of Japan
- EU Consumer Price Index (CPI) (YoY) (Nov)

In terms of the prospects for the movement, we definitely follow all the news around the new strain-Omicron, since any negative will lead financial flows to the protective Yen, and positive, on the contrary, will undermine the demand for the Yen.

The fundamental picture, still more bullish than bearish, is solely responsible for the downward movement by the demand for protection. So, the currency pair may continue to experience pressure in the near future, but the mid-term estimate of the movement is up, here is the position of the BoJ in relation to the national currency, plus the rather weak macro data from Japan and the definitely softer monetary policy of the BoJ.
While the market is at the level of 128.00, we suggest keeping the increased danger for trading the currency pair.

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