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The USDJPY Remains Under Pressure

12/5/2022 11:08 AM

The US dollar shows multidirectional dynamics, consolidating near 134.35 after a noticeable decline at the end of last week and updating local lows from August 16, as well as reacting extremely weakly to the publication of an optimistic report on the US labor market for November.

The data released last Friday showed an increase in the number of Nonfarm Payrolls by 263.0 thousand, which turned out to be 63.0 thousand better than analysts' expectations. Average Hourly Earnings also climbed 0.6% after rising 0.5% in October, although analysts had forecast a slowdown to 0.3%. The Unemployment Rate remained at the same level of 3.7%. Nevertheless, the positive dynamics of the US currency turned out to be short-lived, as investors believe that the current statistics will have little effect on the upcoming decisions of the US Federal Reserve on interest rates. In December, the regulator is expected to increase the rate by only 50 basis points after adjusting it by 75 basis points for 4 meetings in a row.

The yen is moderately supported by macroeconomic statistics from Japan: the Manufacturing PMI from Jibun Bank in November corrected from 50.0 points to 50.3 points with a neutral forecast.

At the end of last week, the deputy governor of the Bank of Japan, Masayoshi Amamiya, said that inflation in the country is holding at peak values, but in 2023 it will probably correct to 2.0%. The official said that the regulator could suffer significant losses of approximately 28.6 trillion yen on assets if their yields rise by 1% along the entire yield curve. For his part, Asahi Noguchi, Board member of the Bank of Japan, noted that in order to slow down the growth of consumer prices, a more rapid increase in wages is necessary, as more companies shift their costs to consumers, and a stable exchange rate of the yen is also important.

Bollinger Bands in D1 chart demonstrate a stable decrease. The price range is expanding; however, it fails to catch the surge of last week's "bearish" sentiments. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic, having approached the zero level, reverses into a horizontal plane, indicating the risks of the US currency being oversold in the near future.

Resistance levels: 134.78, 135.57, 136.50, 137.50. | Support levels: 133.61, 133.00, 132.00, 131.00.

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