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USDJPY Market Update

1/17/2023 12:14 PM

Against the negative dynamics of the American currency, the USD/JPY pair declines, trading around 128.60.

Trading volumes are decreasing in anticipation of the meeting of the Bank of Japan, which will be held tomorrow at 5:00 (GMT+2). Statistics on the price index for corporate goods reflected the increase in inflationary pressure: the indicator rose from 9.7% to 10.2% YoY instead of declining to 9.5% and decreased from 0.8% to 0.5% MoM compared to forecasts of 0.3%. Negative dynamics may encourage the Bank of Japan officials to switch to the "hawkish" rhetoric. Experts suggest that a fundamental change in the vector of monetary policy is most likely by the spring of this year and are in no hurry to make forecasts for the interest rate, although most of them are inclined to believe that the rate will remain at –0.10%, as there are prerequisites for a severe deterioration of the situation not yet in the country's economy. Tomorrow data on the volume of industrial production will be published, which has been declining for four consecutive months, losing 0.1% in December.

After a break in trading due to the celebration of Martin Luther King Day, the quotes of the American currency show a negative trend around 102.000 in the USD Index. Against the lack of macroeconomic data, investors drew attention to the material of The Washington Post about the forthcoming boycott of the discussion of raising the national debt limit in the US Congress by the Republican Party until the presidential administration adopts a plan for significant spending cuts. If the indicator does not increase, the country may face a default, negatively affecting the labor market.

On the daily chart, the trading instrument moves within a local downward corridor, holding at the low of the year at 127.00.

Technical indicators strengthen the sell signal: fast EMAs on the Alligator indicator remain significantly from the signal line, and the AO oscillator histogram forms downward bars below the transition level.

Resistance levels: 130.41, 132.90. | Support levels: 127.16, 123.80.

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