7) USDJPY

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

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

• Resistance: 112.50, 113.00, 114.30
• Support: 111.20, 110.25, 109.20

The currency pair has been very active and mixed this week with broad intraday trading. The reasons for such high activity are the thin market on Asian stock exchanges, periodic demand for risky assets, and of course the new prime minister in Japan. The currency pair traded within a range of 145 pips over the week, while closing +136 pips. At the end of the week, the market is still in a state of fear, the value of the Fear-Greed indicator points to 34.

Fear this week has become slightly less, we recall, the Russian leadership announced that it is ready to help the EU in overcoming the energy crisis. In the US Senate, Chuck Schumer announced an agreement to extend the national debt ceiling until early December. However, the risks associated with the Chinese giants Evergrande and Fantasia, although they faded into the background, still persist, as well as the energy crisis in China.

Since the beginning of the week, the new Prime Minister of Japan, Fumio Kishida, has been the main X factor in the Japanese stock market. The reason was that many investors believed that Kishida, who said he would eliminate inequalities in wealth, would use tax tightening. But later it became known that Fumio Kishida is also concerned about the unrest in the stock market, which he indirectly caused. He later announced that he would not try to change taxes on capital gains and dividends for now, as he intends to take other steps to better distribute wealth, such as raising the wages of medical workers, etc.
Prime Minister Fumio Kishida has set an election for October 31 and has pledged generous cash payments to citizens affected by COVID. All of this returned positive sentiment to the Japanese stock market and put additional pressure on the JPY.

In terms of news, Japan did not publish anything, only news of the second and third plan.
There was a lot of news in the US: the publication of a negative trade balance, which showed a deficit of $ 73.3 billion. This was followed by very positive reports from APD and on the number of applications for unemployment benefits. However, the long-awaited US nonfarm payrolls report was disappointing, showing employment growth of 194,000, well below market expectations for 488,000 new jobs. The dollar fell immediately after the publication, but then seemed to recover as the market suggested that these numbers would not change the Fed's plans to reduce bond purchases in the coming months. Since although these numbers are not very strong, do not forget about the decrease in the unemployment rate to 4.8% from 5.2% in August, as well as the growth of the average hourly wage by 4.6% on an annualized basis. Plus inflation, since the Fed is already really worried about the growth of inflation against the background of widespread growth in energy prices.

It is not known whether the reduction of the QE program will be announced in November, but it does not matter anymore, since the fact that the Fed will begin to cut it by the end of the year is a fact.

Next week, the macroeconomic calendar for Japan remains empty, all news is exclusively for the United States.
Wednesday:
- US Core CPI (MoM) (Sep)
- FOMC Meeting Minutes - USD
Thursday:
- Initial Jobless Claims - USD
Friday:
- US Core Retail Sales (MoM) (Sep)

The general fundamental background for the currency pair has not changed yet, the upward direction is still basic. At the end of the week, the currency pair broke through the round level 112.00
We perceive the downward movement as more corrective and believe that the downward movement will be severely limited.
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.

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