USDJPY Analysis – December-18-2023

FxNews – The USDJPY currency pair has exhibited a bearish trend since mid-November. It has stabilized below the Ichimoku Cloud and is challenging the 38.2% Fibonacci resistance level. Concurrently, the RSI indicator is emerging from the oversold territory, adding another layer of complexity. An exciting development is noted in the Awesome Oscillator, indicating a divergence. This suggests that a consolidation phase or trend reversal could be imminent for the USDJPY.

Considering these technical indicators and the current price movement, we foresee a possible consolidation phase for the USDJPY pair. This could lead to an increase in its value, potentially surpassing the 38.2% Fibonacci level. The 50% Fibonacci support level further supports this technical analysis. However, this forecast would be negated if the price falls below the 140.76 support level, signaling a continuation of the bearish trend.

USDJPY Technical Analysis – Daily Chart

Japan’s Bond Yields and BOJ Policy Decisions

Reuters – The yield on Japan’s 10-year government bonds recently dipped below the 0.70% mark. This movement comes as the financial world anticipates the Bank of Japan’s upcoming monetary policy announcement. The focus is on whether there will be any indications of the central bank moving away from its prolonged ultra-loose economic policies. In early discussions, BOJ Governor Kazuo Ueda explored various strategies, including timing interest rate hikes if the central bank opts to terminate its hostile interest rate policy. Despite these considerations, Bloomberg has highlighted that BOJ officials are not under pressure to rapidly tighten policies unless there’s convincing evidence of wage increases that support sustained inflation.

Regarding economic data, recent reports reveal a mixed picture: Japan’s manufacturing sector continued to shrink in December, while the services sector experienced its highest growth in three months.