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USDJPY Market Update

11/18/2022 11:42 AM

The US dollar shows a moderate decline, retreating from its local highs of November 14, updated the day before. The USD/JPY pair is testing 140.00 for a breakdown, reacting to the publication of optimistic macroeconomic statistics from Japan.

The National Consumer Price Index in October accelerated from 3.0% to 3.7%, while analysts expected a slowdown in dynamics to 2.7%, and the National CPI excluding Food and Energy increased from 1.8% to 2.5%, also beating its forecasts of a rise to 1.9%. Accelerating inflation gives hope that the Bank of Japan will be able to abandon the policy of near-zero interest rates in the foreseeable future; however, it is still premature to talk about the prospects for tightening monetary conditions.

In turn, the US Federal Reserve is preparing to raise interest rates during a meeting on December 14. Analysts are confident that the indicator will be adjusted for the sixth time in a row; however, against the backdrop of a slowdown in inflation, the step size may be significantly lower than 75 basis points. At the same time, the October Consumer Price Index at 7.7% still remains well above the regulator's targets, generating risks for sustainable economic growth in the future.

Bollinger Bands in D1 chart demonstrate a stable decrease. The price range is slightly narrowing, being spacious enough for the current activity level in the market. MACD indicator reverses to growth while forming a new buy signal (the histogram is about to consolidate above the signal line). Stochastic shows more active growth and is currently located approximately in the center of its area, signaling in favor of the development of corrective growth in the nearest time intervals.

Resistance levels: 140.79, 141.50, 142.54, 143.51. | Support levels: 139.90, 138.50, 137.50, 136.50.

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