Solid News

The USD/JPY pair is correcting around the level of 135.95.

The yen is holding on to last week's gains as discussions continue in the country about a 43.0T yen increase in the defense budget over the next five years to implement a decision to adjust the tax system gradually. Although Prime Minister Fumio Kishida is under serious criticism even from his supporters, he still adheres to the strategy of drastically strengthening the defense capability and insists that measures to finance it must be taken as soon as possible. An increase in the fiscal burden is a negative factor, but it will exert pressure gradually and in the long term. Locally, investors reacted positively to the December Service PMI, which rose to 51.7 points from 50.3 points a month earlier, indicating further recovery of the sector.

The US dollar continues its corrective dynamics, trading around 104.200 in the USD Index and ending the week with a decrease. After poor data on sales in the leading sectors of the economy, investors did not count on the positive dynamics of business activity indices: Service PMI in December fell to 44.4 points from 46.2 points earlier, Manufacturing PMI – to 46.2 points, from 47.7 points, continuing the global downtrend that began in May at 60.0 points.

On the daily chart of the asset, the trading instrument moves in a local ascending corridor, which transforms into a Flag pattern.

Technical indicators maintain a stable sell signal: fast EMAs on the Alligator indicator are kept below the signal line, and the AO oscillator histogram forms corrective bars below the transition level.

Support levels: 134.50, 130.30. | Resistance levels: 137.80, 142.00.