7) USDJPY

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

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

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

Yesterday the currency pair continued its three-day growth, which it had begun on Tuesday, quietly moving towards multi-year highs. The year is coming to an end and the demand for risky assets continues to grow, which supports the upward movement. Although the market is still in the Risk-OFF phase, the value of the Fear-Greed indicator approached the neutral state and points to 42.

Global risk sentiment continues to rise. The data shows that a person infected with Omicron is estimated to have 31-45% fewer hospital visits compared to a Delta patient and 50-70% less likely to be hospitalized. Also, the FDA approved another oral drug for Covid-19 from Merck a day after Pfizer's approval of the Omicron pill is also contributing to the mood of risk.

Japan did not release macro data yesterday, but the Japanese press reported that the first locally transmitted case of the new Omicron strain has been detected in Tokyo. In the USA, on the eve of the Christmas holidays, the macroeconomic calendar was loaded with news of the second and third order. The country released data on durable goods orders for November, which rose 2.5%, beating expectations. Initial jobless claims for the week ending December 17 were confirmed at 205,000, as expected, while the total number of people receiving unemployment benefits remained at the beginning of 2020 at 1.859 million. In addition, personal income of individuals rose 0.4% over the month, while personal spending of individuals rose 0.6%, in line with market forecasts, and Michigan's December consumer sentiment index was revised upward to 70.6 from 70.4.

Japan today released its nationwide core consumer price index (CPI) on an annualized basis for November, which beat expectations at 0.5%, with growth forecast to 0.4%, the fastest growth in nearly two years. Which is quite positive news as it confirms BoJ's words that they are on track to hit the inflation target of 2%. But so far, core inflation in Japan remains well below the central bank's 2% target. This gives the Bank of Japan the opportunity to continue to pursue an extremely soft monetary policy. BoJ Governor Haruhiko Kuroda has stressed his willingness to keep rates low as other major central banks seek to exit the pandemic-era stimulus regime.

Further, there are no publications, the major players are already resting, but today we can observe profit taking on the eve of a long weekend. Do not forget to follow the development of events around Omicron and the real estate market in China, and we celebrate the New Year!

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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