7) USDJPY

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

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

• Resistance: 113.80, 114.30, 115.40
• Support: 113.00, 112.30, 111.70

The currency pair has been hanging sideways for two full trading days between the levels 113.80 - 113.00. The currency pair practically did not move even despite the fact that yesterday the US Dollar reacted to all the currency pair after the publication of the inflation rate. But since the Japanese Yen is not doing well either, the currency pair was in the balance sheet and simply hung sideways, not responding to macroeconomic events. In addition, for the third day, the Fear-Greed indicator still points to 32, i.e. new risks do not appear which would be able to revive the demand for JPY.

New fears have not been added to the market, the old fears have not gone away, worries about China's financial situation, exacerbated by the energy crisis. Debt problems and potential defaults by major developers, combined with widespread power outages amid coal shortages, have cast doubt on the economic future of the world's second largest economy. Recall, according to Bank of America, about 40% of construction companies in China are under the threat of bankruptcy.

Yesterday Japan did not publish anything important, but the United States did publish the minutes of the FOMC and CPI meeting.
The US dollar index retreated from its annual highs to 94.00 after the values ​​of the US consumer price index (CPI), which rose 5.4% in September, beating expectations of 5.3%. In addition, according to the minutes of the September FOMC meetings, investors have prepared to cut the QE program by 15 billion USD monthly since mid-November.

In Japan, Bank of Japan monetary policy board member Asahi Noguchi was interviewed yesterday commenting on the outlook for central bank policy.
Thesis he said that BoJ should support QE programs as long as there is a risk of a new wave of coronavirus infection. And when the QE program ends, you need to make sure that this action does not impede the Bank of Japan's efforts to achieve the inflation target of 2%. He also said that the rise in commodity prices worsened Japan's terms of trade.

We have already noted systemic problems in the Japanese economy many times. The COVID pandemic has only exacerbated them, not led to the emergence of new ones. Regarding inflation in Japan, to be realistic, BoJ is still very far from the 2% target, and even the rise in global global inflation is unlikely to help Japan. In other words, inflation of 2% is still a pipe dream for Japanese politicians. The demographic factor, that is, the aging of the population, is still the dominant negative factor in the Japanese economy. All this puts serious pressure on the Japanese yen.

Next, today we follow the publications from the USA, namely the weekly data on the number of applications for unemployment benefits, as well as the rather important producer price index (PPI) (m / m) for September, we recall that PPI is viewed as a leading indicator of consumer inflation.
US Retail Sales Baseline (MoM) Tomorrow (Sep)

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.
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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