7) USDJPY

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

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

• Resistance: 112.00, 112.20, 113.00
• Support: 110.25, 109.20, 108.70

The currency pair was very active yesterday and traded in different directions. At the beginning of the day in the Asian session, the currency pair was creeping up, reaching the weekly high of the resistance level of 111.70, and at the moment of the opening of the European session, it bounced off this level and fell sharply downward. By the end of the day, it was fixed in the area of ​​111.40 and today it continues to hang around this level. As a result, for yesterday's trading day, the market is still in the Risk-OFF phase, but there is a slight dynamics towards an increase in the value of the Fear-Greed indicator, now the value is 27.

Risk sentiment changed yesterday after the Russian leader assured Europe of additional gas supplies. In addition, Chief Republican in the US Senate Mitch McConnell said his party would allow the federal debt ceiling to be extended until December to prevent a default on federal debt. This further increased investor appetite for riskier assets. All of this resulted in some pressure on both currencies, but stronger on the safe-haven dollar. But do not forget that the global issues of the energy crisis in China have not been resolved, issues regarding the Chinese developers Evergrande and Fantasia Holdings Group are also not on the agenda.
It is clear that now the focus of investors' attention is the US labor market, but in any case, the market is in the phase of risk aversion.

Returning to the US labor market, a very positive ADP nonfarm payrolls report was released yesterday.
Where the actual value was 568 thousand, as opposed to the projected 428 thousand. Recall, the national employment report from the ADP reflects changes in the number of jobs in the non-agricultural sector and is based on data from about 400 thousand business sources. This report is published 2 days before the release of government statistics on employment and serves as a good benchmark for forecasting changes in the number of people employed in the US nonfarm sector.

Demand for the Japanese yen eased further today after BoJ downgraded its economic valuation in five of the country's nine regions, saying their recovery has stalled due to renewed Covid-19 cases. Production cuts due to supply shortages have also affected these areas, according to the Bank of Japan's quarterly regional economic report released today. All this led to a moderate growth, but in any case, the main risks are still present, so in the short term the currency pair may still collapse.
In addition, Japanese Prime Minister Kishida will announce a new stimulus package ahead of the October 31 general election.

Later today we await weekly data on the number of initial applications for US unemployment benefits
Tomorrow, extremely important publications:
- Nonfarm Payrolls (Sep) - USD
- US Unemployment Rate (Sep) - USD

The general fundamental background for the currency pair has not changed yet, the upward direction is still basic.
We perceive the downward movement as more corrective and believe that the downward movement will be severely limited. Now the currency pair is close to the level of confirmation of the beginning of the downward correction, 111.00 = 38.2% Fibo from the last upward impulse. The area where the steam can fall is 110.60 - 110.25. Even in the event of a breakdown of the 61.8% Fibo level, the currency pair is unlikely to be able to overcome the support level 108.00 in the near future, which was insurmountable many times.

The important thing is that the Fed is very much ahead of the Bank of Japan in terms of normalizing monetary policy. Ultimately, this divergence between central banks could allow US yields to rise faster than their Japanese counterpart, allowing the dollar to rally against the Yen.


#fx #trading #forex #analyze #MT4 #MT5 #USDJPY