The US Fed will conclude its last meeting of 2019 today and expectations call for no change in interest rates, especially following Friday’s strong NFP report. The CPI report will also be closely watched as annualized core inflation is running above the central bank’s 2.0% target. The USDJPY has moved lower over the past few trading sessions, how will today’s post-FOMC press conference impact this currency pair? Today’s fundamental analysis will take a look at the upside potential as well as the downside risk in this currency pair.
The Japanese BSI Large All Industry Index and the BSI All Large Industry Index showed a sharp contraction for the fourth quarter. This was the latest economic data set pointing towards a weak global economy. The Japanese Yen came under selling pressure and pushed the USDJPY to the upper band of its resistance area. What impact will US data and the FOMC have on price action later in today’s trading session? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Here are the key factors to keep in mind today for US Dollar trades:
- US CPI: The US CPI for November is predicted to increase by 0.2% monthly and by 2.0% annualized. Forex traders can compare this to the US CPI for October, which increased by 0.4% monthly and by 1.8% annualized. The US Core CPI for November is predicted to increase by 0.2% monthly and by 2.3% annualized. Forex traders can compare this to the US Core CPI for October, which increased by 0.2% monthly by 2.3% annualized.
- US FOMC Interest Rate Decision: The US FOMC Interest Rate Decision is predicted to show Upper Bound Interest Rates at 1.75% and Lower Bound Interest Rates at 1.50%. Forex traders can compare this to the previous US FOMC Interest Rate Decision, which showed Upper Bound Interest Rates at 1.75% and Lower Bound Interest Rates at 1.50%. The Interest Rate on Excess Reserves is predicted at 1.55%. Forex Traders can compare this to the previous Interest Rate on Excess Reserves which was reported at 1.55%.
- US Monthly Budget Statement: The US Monthly Budget Statement for November is predicted at -$206.9B. Forex traders can compare this to the US Monthly Budget Statement for October, which was reported at -$134.5B.
Here are the key factors to keep in mind today for Japanese Yen trades:
- Japanese BSI Large All Industry Index and BSI Large Manufacturing Index: The Japanese BSI All Large Industry Index for the fourth-quarter was reported at -6.2 quarterly, and to the Japanese BSI Large Manufacturing Index was reported at -7.8. Forex traders can compare this to the Japanese BSI All Large Industry Index for the third-quarter, which was reported at 1.1, and to the Japanese BSI Large Manufacturing Index which was reported at -0.2.
- Japanese Domestic Corporate Goods Price Index: The Japanese Domestic Corporate Goods Price Index for November increased by 0.2% monthly and by 0.1% annualized. Economists predicted an increase of 0.1% monthly and a flat reading of 0.0% annualized. Forex traders can compare this to the Japanese Domestic Corporate Goods Price Index for October which, decreased by 0.4% monthly and which increased by 1.1% annualized.
Should price action for the USDJPY remain inside the or breakdown below the 108.350 to 108.900 zone, the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 108.750
- Take Profit Zone: 106.500 – 106.950
- Stop Loss Level: 109.200
Should price action for the USDJPY breakout above 108.900, the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 109.200
- Take Profit Zone: 109.700 – 110.000
- Stop Loss Level: 108.900
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