7) USDJPY

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

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

• Resistance: 118.70, 120.30, 121.65
• Support: 115.50, 115.00, 114.00

Yesterday, the currency pair continued its upward movement, with slight ups and downs on the back of the publication of data on the Fed's interest rate. However, globally, the currency pair was quite calm yesterday in its movement. During the day, the currency pair made its way up 50 pips. Everyone noted resistance at the round level of 119.00, it is quite possible that the bulls will still have enough positive, it is possible that market participants are still waiting for tomorrow's BoJ decision on monetary policy and forecasts. The market continues to calm down, we are increasingly seeing positive movements in stock indices and other risky assets, which indicates that either market players have realized the new reality and have already assessed that there will be no quick solutions. Yesterday, against the backdrop of a broad demand for risk, world stock indices rose, S&P500 by 2.2%, the European Stoxx600 by 3.1%, the Japanese Nikkei 225 index by more than 2%. In light of this, the value of the Fear-Greed indicator continues to grow and now points to 22.

Signs of progress in the Russian-Ukrainian ceasefire talks continue to support bullish sentiment in the markets. In fact, Russian Foreign Minister Sergei Lavrov said that there are hopes for compromises and are close to agreeing on some wording of agreements with Ukraine. In addition, according to the Financial Times, Ukraine has said it will formally drop its application for NATO membership and accept restrictions on its armed forces. On the other hand, the Chinese government has promised to support economic growth and capital markets. In terms of COVID, China reported a second day of decline in new infections after breaking record highs over the weekend, with 1,317 COVID cases recorded on March 16, up from 1,952 the day before. The data further bolstered investor confidence and sparked a broad demand for risk. This, in turn, pushed financial flows away from traditional safe-haven assets and supported the currency pair.

In terms of macro data, the US released data on retail sales, which showed a sharp fall in consumer spending and slowed sharply from a 4.9% increase in the previous month to a record modest 0.3% growth in February. The dollar did gain slightly after the Fed announced its policy decision to raise its interest rate target by 25 basis points for the first time since 2018, and it looks like the Fed is set to raise rates at all six remaining meetings in 2022.

At a press conference after the meeting, Fed Chairman Jerome Powell stressed that the economy is strong enough to withstand monetary tightening. Powell added that the US central bank could start cutting its balance sheet by almost $9 trillion as early as its next meeting in May, but that's not certain. However, the market's initial reaction was short-lived as the hawkish sentiment was more or less in line with market expectations. This was evident in the appearance of fresh sales around the US dollar. However, the huge difference in US and Japanese Treasury yields continues to support bulls in the currency pair. The 10-year bond yield hit a three-year high of 2.246% during Fed Chairman Jerome Powell's press conference and then slipped slightly towards the close.

With regards to Japan, important macro data was not published. However, today a strong earthquake of magnitude 7.4 occurred not far from Fukushima, and later the head of the Cabinet of Ministers of Japan, Matsuno, said that there were no deviations from the norm at the nuclear power plants of Fukushima and Onagawa. BOJ Governor Haruhiko Kuroda spoke today saying that it is too early to discuss the details of how to abandon the easing policy and if inflation approaches the BOJ's 2% target, the BoJ board will make public its position on whether they will wind down their easing policy. He also added that when the Bank of Japan considers scaling back its loose monetary policy, it will do so, ensuring that markets remain stable.

All these reports become more interesting due to the fact that tomorrow the Bank of Japan is due to announce its decision regarding monetary policy, and the national core Japanese consumer price index for February will also be published. Many have begun to note that although all representatives of the Bank of Japan are still dovish, some are already beginning to admit that the inflation target can be reached. We follow.

Today:
- The number of initial claims for unemployment benefits in the United States
Tomorrow:
- Nationwide Core Consumer Price Index (CPI) (YoY) (Feb)
- Bank of Japan Interest Rate Decision
- Press conference of the Bank of Japan

Investors in the currency pair are still closely following all the headlines related to the military crisis in Eastern Europe. Although it has been repeatedly noted that usually the influence of geopolitical events on the market tends to weaken after a relatively short period of time, we advise staying on the sidelines for now.

Fundamental forecasts for the currency pair have not changed. The yield of benchmark 10-year US bonds has repeatedly exceeded the psychological level of 2% this year, and this leads to an increase in the difference between the yields of 10-year US and Japanese bonds, which continues to be the main upward driver. Plus, let's not forget the BOJ's yield curve control policy, where the yield on 10-year Japanese government bonds is close to zero, the BoJ recently once again confirmed its commitment to this policy. Also, recent data on inflation in Japan showed that it is still not growing, which confirms the words of the head of the BoJ about the inability to even talk about tightening monetary policy in the coming years.

Against the backdrop, one can 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, including Japan. In other words, we will observe a more bullish market for the currency pair throughout 2022.