7) USDJPY

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

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

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

The currency pair traded in different directions yesterday, but at the end of the day it ended up in the same place from which it started. Since both currencies are traditional safe-haven currency, and the market is now at risk, the currency pair cannot have a clear direction. The widespread demand for risk has been fueled by a South African study on a new strain, Omicron. Against this background, the value of the Fear-Greed indicator is gradually increasing and now points to 36.

The focus of attention is still focused on the development of the situation around the Omicron strain.
Investors were optimistic after the release of the South African Ministry of Health study. South Africans infected with Covid-19 in the current fourth wave of infections are 80% less likely to be hospitalized if they contract the omicron variant, compared to other strains, according to a study published by the National Institute of Infectious Diseases.
It was also noted that the number of infections in South Africa after Omicron is declining as quickly as it increased. Experts assume that the peak has been passed.

In the wake of the new COVID-19 outbreak, the FDA has urgently approved Pfizer as the first oral and home treatment for people over 12 years old, but the White House has warned that it will take months before the drug becomes available in large quantities to the general public.
Also positive for the demand for risk was the statement of the US President. US President D. Biden said yesterday that the US will not return by March 2020 in terms of quarantine. He also encouraged Americans to get vaccinated.

Nonetheless, the Fed's hawkish outlook should help limit any meaningful decline for the US dollar and limit the upside potential for the currency pair.

In terms of macro data, yesterday the US published the final GDP for the third quarter, which was revised upwards, and amounted to 2.3% against the forecast of 2.1%, which is also a positive moment for the US dollar.
Japan, however, published a report on monetary policy BoJ. Everything there, as usual, support programs for a long time, everything will be flooded with fresh printed Yens.
Bank of Japan Governor Haruhiko Kuroda said that the depreciation of the Yen has a positive impact on the Japanese economy. However, he added that BoJ's current monetary policy does not have a direct target for the yen's exchange rate. He reaffirmed the Bank of Japan's commitment to continue the current strong monetary easing through the QQE programs with the YCC.

Further this week, we will monitor the data from the United States on the number of applications for unemployment benefits, also do not forget about the story with COVID.
But the key publication for the currency pair is still the data on consumer inflation in Japan, which will be published tomorrow.

We expect that the Fed's monetary tightening will tend to boost not only short-term, but also medium and long-term US yields over 2022. We also expect the yield curve on the 2-10 year bonds to flatten out. It is possible that the yield on 10-year US Treasuries will rise to 2% by the end of 2022. The rise in Treasury yields will lead to a steady rise in the US dollar. Considering the Bank of Japan's policy of controlling the yield curve, whereby the yield on Japan's 10-year government bonds is close to zero. Leads to the fact that the upward direction remains 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.

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