Source: PaxForex Premium Analytics Portal, Fundamental Insight
Japanese Foreign Reserves for December stood at $1,405.8B. Forex traders can compare this to Japanese Foreign Reserves for November, reported at ¥1,405.8B. The Preliminary Japanese Leading Index for November was reported at 103.0, and the Preliminary Japanese Coincident Index was reported at 93.6. Forex traders can compare this to the Japanese Leading Index for October, reported at 101.5, and the Japanese Coincident Index reported at 89.8.
The US NFIB Small Business Optimism Index for December is predicted at 98.6. Forex traders can compare this to the NFIB Small Business Optimism Index for November, reported at 98.4. The US IBD/TIPP Economic Optimism Index for December is predicted at 50.2. Forex traders can compare this to the US IBD/TIPP Economic Optimism Index for November, reported at 48.4.
Volatility is expected to remain elevated as traders await December inflation data. The US Fed may deliver a trifecta of actions to combat inflation. They consist of an accelerated end of bond purchases and liquidity injection, an increase in interest rates, and a reduction of its balance sheet, which swelled to over $9 trillion. The US Fed believes the US economy can withstand all three actions, but it ignored inflation for too long, extending the time policy moves will take for the desired impact. The global supply chain bottlenecks can persist throughout 2022, with China shutting down a port city to combat Covid-19, and a tight labor market adds wage-based inflation.
The forecast for the USD/JPY remains bearish despite the potential of four interest rates hikes by the US Fed to combat inflation. The negative effect on the debt-fueled US economy may counter the hawkish US central bank and potential bullish impact on the US Dollar. This currency pair is likely to experience a rise in volatility as the Kijun-sen, and the Tenkan-sen, extend their advance. The Ichimoku Kinko Hyo Cloud shows early signs of a bearish collapse, magnifying selling pressures. The CCI adds to the bearish outlook after crashing out of extreme overbought territory with plenty of downside potential ahead. Can bears pressure the USD/JPY into an accelerated sell-off until price action reaches its next horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the USDJPY remain inside the or breakdown below the 114.850 to 115.500 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 115.150
- Take Profit Zone: 112.500 – 113.000
- Stop Loss Level: 116.000
Should price action for the USDJPY breakout above 115.500, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 116.000
- Take Profit Zone: 117.100 – 117.450
- Stop Loss Level: 115.500
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