General analysis USDJPY for 03.12.2021
Current dynamics
World markets are frozen in anticipation of specifics from the regulators. Traders rely more on words than on statistics. Everyone is looking for hints on how central banks will act if the impact of new strain COVID-19 Omicron will be significant.
Despite the uncertainty caused by COVID-19, Federal Reserve Chairman Jerome Powell is determined to roll back quantitative easing more quickly. The positive labor market dynamics (initial jobless claims in November came in at 220K, better than forecast) together with high inflation in the U.S. forces the Fed to be more aggressive. Obviously, the Fed is trying to regain control of inflation in order to make monetary policy adjustments faster.
The Bank of Japan, on the other hand, is showing Eastern self-restraint ("If a samurai cannot make a decision in seven breaths and exhalations, it means that the time to make a decision has not yet come"). Hitoshi Suzuki, member of the board of the Japanese central bank, stated that the regulator has not decided on the fate of the pandemic aid program. So from his words follows that the Bank of Japan will be looking for ways to optimize the soft monetary policy. At the same time, the Bank of Japan will continue to support corporate financing under the pandemic program. The PMI data released today indicates a recovery in Japan's service sector. The index rose to 53 basis points in November, limiting the pair's gains.
Support and resistance levels.
The pair USD/JPY is trading in the range of 113.750- 112.750. The instrument has repeatedly tested the strong support 112.750 this week, but failed to consolidate below. MACD and RSI oscillator have formed signals indicating a possible market reversal upwards.
- Support levels: 112.75, 112.00, 111.00
- Resistance levels: 113.75, 114.40, 115.50
Trading scenarios
- Long positions can be opened above the level of 113.750 with targets of 114.400, 114.90 and a stop loss of 113.25 Deadline: 1-3 days
- Short positions can be opened from the level of 112.75 with targets 112.00, 111.500 and stop-loss 113.30: 1-3 days