Japanese inflation data came in as expected and confirmed the absence of inflationary pressures. Department store sales slumped, but convenience store sales expanded. The USDJPY reversed from its highs while it remains inside its horizontal resistance area. Forex traders now await a batch of US economic data. Will it initiate a sell-off in this currency pair or can it renew a bullish push? Today’s fundamental analysis will take a look at the upside potential as well as the downside risk in this currency pair.
US personal income and spending data will give forex traders a key economic report to finish the last full trading week of 2019. Economists predict an increase in both categories. The final third-quarter GDP and December consumer confidence data will also be released together with a regional economic report. How will it impact price action in the USDJPY, which started to retreat from its recent high? 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 GDP: The Advanced US GDP for the third-quarter is predicted to increase by 2.1% annualized. Forex traders can compare this to the previous third-quarter GDP, which increased by 2.1% annualized. Personal Consumption for the third-quarter is predicted to increase by 2.9% annualized. Forex traders can compare this to the previous third-quarter Personal Consumption, which increased by 2.9% annualized. The GDP Price Index for the third-quarter is predicted to increase by 1.8% annualized. Forex traders can compare this to the previous third-quarter GDP Price Index, which increased by 1.8% annualized. The Core PCE for the third-quarter is predicted to increase by 2.1% annualized. Forex traders can compare this to the previous third-quarter Core PCE, which increased by 2.1% annualized.
- US Personal Income and Personal Spending: US Personal Income for November is predicted to increase by 0.3% monthly and Personal Spending is predicted to increase by 0.4% monthly. Forex traders can compare this to Personal Income for October, which was reported flat at 0.0% monthly and to Personal Spending, which increased by 0.3% monthly. Real Personal Spending for November is predicted to increase by 0.2% monthly. Forex traders can compare this to Real Personal Spending for October, which increased by 0.1% monthly. The PCE Deflator for November is predicted to increase by 0.2% monthly and by 1.4% annualized. Forex traders can compare this to the PCE Deflator for October, which was increased by 0.2% monthly and by 1.3% annualized. The PCE Core Deflator for November is predicted to increase by 0.1% monthly and by 1.5% annualized. Forex traders can compare this to the PCE Core Deflator for October, which increased by 0.1% monthly and by 1.6% annualized.
- US Michigan Consumer Sentiment: Final US Michigan Consumer Sentiment for December is predicted at 99.2. Forex traders can compare this to previous US Michigan Consumer Confidence for December, which was reported at 99.2. Final Current Conditions for December are predicted at 115.6 and Final Expectations are predicted at 89.7. Forex traders can compare this to previous Current Conditions for December, which were reported at 115.6 and to Expectations, which were reported at 89.7.
- US Kansas City Fed Manufacturing Activity Index: The US Kansas City Fed Manufacturing Activity Index for December is predicted at -3. Forex traders can compare this to the US Kansas City Fed Manufacturing Activity Index for November, which was reported at -3.
Here are the key factors to keep in mind today for Japanese Yen trades:
- Japanese National CPI: The Japanese National CPI for November increased by 0.5% annualized. Economists predicted an increase of 0.5% annualized. Forex traders can compare this to the Japanese National CPI for October, which increased by 0.2% annualized. The Japanese National Core CPI for November increased by 0.8% annualized. Economists predicted an increase of 0.7% annualized. Forex traders can compare this to the Japanese National Core CPI for October, which increased by 0.7% annualized. The Japanese National CPI Excluding Fresh Food for November increased by 0.5% annualized. Economists predicted an increase of 0.5% annualized. Forex traders can compare this to the Japanese National CPI Excluding Fresh Food for October, which increased by 0.4% annualized.
- Japanese Nationwide Department Store Sales: Japanese Nationwide Department Store Sales for November decreased by 6.0% annualized. Forex traders can compare this to Japanese Nationwide Department Store Sales for October, which decreased by 17.5% annualized.
- Japanese Convenience Store Sales: Japanese Convenience Store Sales for November increased by 1.0% annualized. Forex traders can compare this to Japanese Convenience Store Sales for October, which increased by 1.8% annualized.
Should price action for the USDJPY remain inside the or breakdown below the 109.150 to 109.700 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 109.300
- Take Profit Zone: 107.450 – 107.900
- Stop Loss Level: 110.000
Should price action for the USDJPY breakout above 109.700 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 110.000
- Take Profit Zone: 110.950 – 111.650
- Stop Loss Level: 109.300
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