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USDJPY is Recovering Its Positions

1/23/2023 11:04 AM

The US dollar shows a slight increase against the Japanese yen, testing the level of 129.70 for a breakout. Last week, the USD/JPY pair managed to demonstrate an uncertain positive trend; however, weak macroeconomic statistics did not allow the US currency to significantly retreat from its record lows of May 2022. In addition, investors still expect the Bank of Japan to take the path of tightening monetary policy this year in response to increased inflationary pressures. However, the last meeting of the regulator left an ambiguous impression, and now, perhaps, the market will expect the resignation of the current Governor of the Bank of Japan, Haruhiko Kuroda, in April, after which the situation will clear up.

The data from Japan released on Friday once again confirmed the presence of a trend for inflation growth. Thus, in December, the National Consumer Price Index added 4.0% after 3.8% a month earlier, but the real dynamics turned out to be noticeably worse than the expected at 4.4%, and CPI excluding Food and Energy prices corrected from 2.8% to 3.0%, which was higher than the 2.9% predicted by analysts.

Tomorrow, investors are waiting for the release of data on business activity from Jibun Bank. It is expected that the Manufacturing PMI in January will show a moderate increase from 51.1 points to 51.4 points, which may provide additional support to the yen.

Bollinger Bands in D1 chart demonstrate a stable decrease. The price range is slightly narrowing, reflecting the appearance of ambiguous dynamics of trading in the short term. MACD indicator is growing keeping a rather strong buy signal (located above the signal line). Stochastic shows similar dynamics, located approximately in the center of its area, which allows one to count on the further development of the "bullish" trend in the near future.

Resistance levels: 130.00, 131.00, 132.00, 133.00. | Support levels: 129.00, 128.00, 127.00, 126.34.

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