Inflationary pressures in the US are expected to have risen further in December, as measured by the CPI. Forex traders will start to pay closer attention to inflation as it moved above 2.0% annualized, the Fed’s inflation target. This comes at a time of a slowing economy and could pose a greater threat as the year unfolds. The USDJPY moved into its horizontal resistance area, but momentum is decreasing. How will price action react to the release of US data? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.

The Japanese economy continues to struggle. Bank lending weakened as the trade balance posted a surprise deficit in December. A current account surplus was unable to mask weakness in global trade. China reported a very strong trade report for December, but the overall trend suggests more weakness ahead. Will bears force a breakdown in the USDJPY this week, or can bulls keep the rally alive? Today’s fundamental analysis will take a look at the upside potential as well as the downside risk in this currency pair.