7) USDJPY

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

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

• Resistance: 115.60, 116.30, 116.70
• Support: 113.40, 112.50, 111.20

Yesterday the currency pair was multidirectional, trading sideways. This movement was again associated with serious volatility in the stock markets. Stock markets continued to be in a fever yesterday, but it is clear that while the entire fall is being redeemed, geopolitical risks are intensifying. Any fall in the stock markets initially leads financial flows to safe-haven currency. However, the value of the Fear-Greed indicator at the end of the day points to 59.

The geopolitical situation is heating up very strongly. Yesterday US President Joe Biden warned Russia against invading Ukraine. Biden believes that three Russian-American meetings on security issues led to nothing. Biden also said that the US does not intend to reduce its military presence in Europe.

The Chinese real estate market continues to plunge into a deep crisis, China Aoyuan Group Ltd becomes the next Chinese developer to default on its debt obligations amid the monetary crisis. According to data compiled by Bloomberg, Aoyuan Group's combined debt is $688 million.
Last year, China Aoyuan Group Ltd ranked 37th in terms of sales among Chinese property developers, according to China Real Estate Information Corp.

Also, fears of rising inflation remain as real as ever, along with worries about the damage that sustained price increases could do to consumer confidence, all of which are also bolstering demand for safe-haven currency.

Almost nothing was published yesterday, precisely because of the lack of important macroeconomic data, the US dollar lost some interest yesterday, as the yield on 10-year US Treasury bonds fell from a two-year high set at 1.9%. At the beginning of Thursday, there is a positive shift in market sentiment, which may temporarily limit the growth of the dollar. S&P 500 and Nasdaq futures rose 0.55% and 0.75% respectively.

Today Japanese Prime Minister F. Kishida confirmed the declaration of a limited-state of emergency in Tokyo and several other prefectures. This provision will be valid from January 21 to February 13. The Tokyo government confirms that the virus alert level has been raised to the highest level, and the health system's workload level has been raised to the second highest level.

From macro data, the trade balance of Japan for December was published today, which was better than the forecast and amounted to -582.4 billion yen against the forecast of -787.6 billion yen. Quite positive news, we are seeing a very limited reaction of the market, as market participants are waiting for fresh data on inflation in Japan. However, the focus will continue to be on the upcoming January 25-26 meeting of the FOMC, which will help determine the next stage of the currency pair's directional movement.

Today:
- Number of Initial Jobless Claims in the US
Friday:
- Japan Nationwide Core Consumer Price Index (CPI) (YoY) (Dec)
- Minutes of the meeting on monetary policy of the Bank of Japan

Forecasts for the currency pair have not changed, the growth of US Treasury yields and inflation are the dominant factors for the currency pair. The yield on 10-year bonds rose to 1.89%. The difference between the yields of 10-year US and Japanese bonds is widening, which will continue to be the main upward driver. Plus, do not forget about the policy of the Bank of Japan to control the yield curve, in which the yield on 10-year Japanese government bonds is close to zero.

Interest rate differentials and approaches to monetary policy are back in vogue. It is possible to make a meta-prediction that the US dollar, thanks to the Fed's promise, will be stronger compared to the currencies of countries whose rate prospects are static, such as the Bank of Japan and the European Central Bank. In other words, we will observe a more bullish market for the currency pair throughout 2022.