The USDJPY currency pair started Thursday's trading session with a decline. The dollar exchange rate approached a 3-month low again as market participants raised their expectations about the end of the U.S. Fed’s monetary tightening cycle. The upcoming publication of the inflation report for October also boosted forecasts that the American regulator might reach the peak of interest rates. This was stated by Commonwealth Bank of Australia strategist Carol Kong.
Currently, the dollar index, which measures the U.S. national currency against six rivals, has declined to 102.72 (-0.06%). In November, it fell by 3.7%. Subsequently, the currency regained some of its losses due to the quicker development of the U.S. economy than previously expected.
This week, investors will focus on Fed Chairman Jerome Powell's comments. The head of the U.S. central bank will speak on Friday. Until then, the major focus will be on the most important report on the Core Personal Consumption Expenditure price index (PCE) in the U.S. The data will show whether the trend towards disinflation in the country is still in place.
As for the Japanese economy, the latest industrial production figures for October rose 1% from September's increase of 0.5%, and ahead of the market's forecast of 0.8%.
On a year-on-year basis, industrial production also rebounded to 0.9% in October after falling 4.4% in the previous reporting period. These data strengthened the yen's position.
Meanwhile, Bank of Japan board member Toyoaki Nakamura said on Thursday that more time is needed to adjust the financial regulator's ultra-loose monetary policy.
USDJPY quotes are testing the uptrend support on the daily timeframe. Fundamentals strengthen the prospects of breaking the trend support.
In terms of wave analysis, the price is forming the third descending wave on the H4 timeframe. Breaking through the top of the first wave at 147.15 has already taken place. The downward movement may intensify in the near term.
Signal:
The short-term outlook for the USDJPY currency pair suggests selling.
The target is at the level of 142.20.
Part of the profit should be taken near the level of 144.95.
A stop-loss could be placed at the level of 150.00.
The bearish trend is short-term, so trade volume should not exceed 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
