7) USDJPY

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

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

• Resistance: 114.40, 114.70, 115.40
• Support: 112.30, 112.00, 110.80

Yesterday the currency pair fell slightly below the local support level of 113.00, where it hung all day. The reason for the fall is the high volatility in the Japanese stock market. The Nikkei 225 has been falling for several days in a row, bringing financial flows to the safe yen. However, the general phase of the market still kept the currency pair from falling deeper. The market phase is still Risk-ON, with the Fear-Greed indicator pointing at 86.

The Japanese stock market continues to experience strong pressure, which is based on fears around the Chinese real estate market.
The end of the 30-day grace period expires today, November 10, 2021, and China Evergrande Group is due to issue coupon payments totaling $ 148.1 million.
Another major Chinese real estate developer, Yango Group, is delaying bond payments, citing liquidity concerns.
The People's Bank of China continues to operate on the open market and injects record amounts of funds into the system through reverse repo transactions in order to stabilize the situation. Yesterday, the Chinese government held a meeting with developers, discussed market risks and taxes, as well as ways out of the current crisis.

Japan did not publish anything important yesterday.
However, local news reports that Japan is one of the hardest hit countries from the coronavirus pandemic. New Prime Minister Fumio Kishida is set to secure more than 30 trillion yen ($ 265 billion) stimulus package funding over the course of the year.

In the US, the producer price index (PPI) was published. Producer price data provide some hope for easing inflationary pressures after staying stable at 8.6% y / y in October, while benchmark prices also remained unchanged at 6.8%, but they do not guarantee that today's CPI figures will not rise again.
Today's October US CPI is expected to exceed 2008 levels of 5.6%, with we expect to rise to 5.9%, the highest level since 1990, while benchmark prices are expected to rise by 4.3%, which is also a multi-year maximum.
Considering that a number of Fed politicians are louder and louder about the need to raise rates next year, strong data on consumer inflation may well provoke a recovery in US yields, which have dropped quite sharply over the past week. A rise in profitability will lead to an increase in the US dollar.

The latest news that Lael Brainard has gone to the White House for an interview to become the next Fed chairman is giving the Fed pigeons a decent boost at the moment, as Brainard is seen as a calmer candidate than Jerome Powell.
However, there is little she can do now. Brainard cannot stop a cut in the QE program, she cannot cut interest rates, and she cannot even drop the expectation of a rate hike in the face of such a rapid rise in inflation.

This week the macroeconomic calendar for Japan is empty, we follow the data from the United States:
Today:
- US CPI (YoY) (Oct) - USD
- US Core CPI (YoY) (Oct) - USD
- Initial Jobless Claims - USD
Friday:
- JOLTs Job Openings (Sep) - USD

The general fundamental background for the currency pair has not changed yet, and only strengthened the upward potential for the currency pair. Now the difference in approaches to monetary policy between the Fed and the BoJ is an abyss, the Fed is already on the way to normalization and the 'light at the end of the tunnel' is visible, and BoJ is still ready to use all available tools to launch the economy and accelerate inflation. Also, do not forget about the yield on 10-year government bonds of Japan, which is close to zero due to the policy of the Bank of Japan to control the yield curve. 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.

However, now, against the backdrop of a potential exacerbation of the COVID situation in China, it is still possible that we will see a downward correction, but no more. While the potential area of ​​fall within the framework of the downward technical correction, if such begins, we can mark it as an area between the levels of 113.00 = 50.0% or 112.54 = 61.8%.

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