7) USDJPY

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

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

• Resistance: 115.50, 116.70
• Support: 113.40, 112.60, 112.30

Yesterday the currency pair was quite volatile and extremely multidirectional. During the Asian-European session, it traded up and sideways, and at the beginning of the North American session, the currency pair fell down on the background of increased demand for protection. Moreover, the 'magic' level 113.40 kept the currency pair back. Risk sentiment dropped noticeably yesterday, global stock indices collapsed yesterday, financial flows moved into safe-haven currencys. Santa Rally at its best. The value of the Fear-Greed indicator has slightly decreased and points to 31.

Sentiment in the US stock market has soured due to the fact that D. Biden's Build Back Better bill did not pass through the US Congress this year. Let's remind this bill provided for expenses in the amount of 1.75 trillion dollars. According to media reports: The spike in inflation has become a political issue for President Biden's Build Back Better bill, whose critics have pointed to price increases as the reason why now is not the time for Congress to authorize about $ 1.75 trillion in new spending.

Everything else is generally stable. Omicron has yet to make the global economy sneeze, but it looks like it's because the world is tired of blockages and restrictions, not the virus itself. But do not forget about the fact that there is still no official position of the WHO, as well as the fact that in a number of countries the new Omicron strain has already become a 'leader'. According to the latest data, the number of new cases of Omicron infection in Europe and Africa is doubling every two days.

News from China began to cause concern again. Since the calm plan with debt restructuring is somehow delayed. Yesterday it became known that Chinese lenders are suing real estate giant Evergrande for more than $ 13 billion. The court accepted 367 claims against Evergrande.

In terms of macro data, quite important weekly indicators from the labor market were published in the US yesterday. The US published the number of initial jobless claims for the week ended December 10, which increased to 206 thousand, which did not meet market expectations. However, the total number of people receiving unemployment benefits fell again to 1.845 million.

The Bank of Japan announced its decision today. The Bank of Japan is leaving the policy unchanged and will decide whether to cut the stimulus measures under the QQE program only after March. It also allowed part of its emergency financing program for small and medium-sized businesses to be extended for an additional six months after the March 2022 deadline. The yield curve control policy remained unchanged by 8-1 votes, confirming its softest position among major central banks. The short-term target interest rate remains at -0.1%, and the yield on 10-year bonds is around 0%.

Next, we follow the end of the week, also do not forget that this is the last full-fledged working week, then everything will be even less predictable. Plus, we are very closely following the development of the situation around the new Omicron strain, and the real estate market in China.

The fundamental background for the currency pair has not changed yet. The upward direction for the currency pair is still the main one. The Fed and the Bank of Japan are moving in opposite directions with regard to monetary policy. The Fed is already on its way to normalization and has already confirmed an acceleration in the process of winding down the QE program, and there are even real forecasts of three interest rate hikes next year. BoJ is still ready to use all the available tools to launch the economy and accelerate inflation. 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. Plus, do not forget about the Bank of Japan's policy of controlling the yield curve, in which the yield on 10-year Japanese government bonds is close to zero.

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