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USDJPY Decline for the Fourth Week in a Row

11/10/2022 2:25 PM

The USD/JPY pair continues its decline for the fourth week in a row, trading in the 146.20 area, after reaching yearly highs.

Quotations of the yen are supported by political uncertainty in the US associated with the Midterm elections to the US Congress, as well as constant warnings from the Japanese government about the possibility of emergency foreign exchange intervention in the event of a new depreciation, which reduces the influence of sellers in the market. The Japanese economy as a whole continues to recover moderately, although growth is only at the expense of the services sector. The final lifting of quarantine restrictions, including on the entry of foreign tourists, is boosting profits in the tourism, entertainment, and trade industries, while industrial production continues to be under pressure due to high energy prices and lower orders. This situation is illustrated by the November data of the Reuters Tankan index of Business Confidence, which decreased from 5.0 points to 2.0 points for the industry, and increased from 15.0 points to 20.0 points for the services sector.

The American currency is currently under pressure due to the uncertainty of the results of the elections to the US Congress. According to the latest vote count, the Democratic Party will lose its majority in the House of Representatives, but may retain control of the Senate. In any case, the adoption and implementation of decisions by the administration of President Joe Biden will be difficult, and political tensions will increase. Today's publication of inflation data for October also raises doubts. The Consumer Price Index is expected to be 8.0%, while the Core CPI is expected to amount to 6.5%. The implementation of the forecast will not contribute to slowing down the rate of increase in the US Federal Reserve interest rate and will increase uncertainty about the further actions of the regulator.

The price consolidated below 146.87 (Murray [7/8]), which gives the prospect of further decline to the levels of 143.75 (Murray [6/8]) and 140.62 (Murray [5/8]). The key for the "bulls" is the center line of Bollinger Bands at 147.90, a breakout of which will cause growth to the levels of 150.00 (Murray [8/8]) and 153.12 (Murray [+1/8]).

Technical indicators don't provide a clear signal: Bollinger Bands have reversed horizontally after a long rise, MACD is decreasing in the positive zone, and Stochastic is reversing upwards.

Resistance levels: 147.90, 150.00, 153.12. | Support levels: 143.75, 140.62.

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