FxWirePro: USD/JPY Daily Outlook

Chart - Courtesy Trading View 

Spot Analysis:

USD/JPY was trading 0.13% higher on the day at 113.61 at around 10:45 GMT

Previous Week's High/ Low: 113.95/ 112.53

Previous Session's High/ Low: 113.55/112.82

Fundamental Overview:

Chinese rate cut added to market optimism, weighing on the Japanese yen.

The People’s Bank of China (PBOC) announced plans to cut banks' reserve requirements by 50 basis points next week, for the second time in 2021. 

Further supporting risk-on was news that the symptoms associated with the Omicron Covid variant are mild.

Fed funds futures are still pricing in two U.S. rate increases next year, beginning in May.

Friday’s consumer price report expected to show another sharp rise in the annual inflation rate in November, supporting the Fed view.

Technical Analysis:

- USD/JPY has edged above daily cloud

- 5-DMA has turned and is now supporting upside

- RSI is around 50 levels and Stochs are on verge of bullish rollover from oversold levels

- Price action is testing 21-EMA resistance, break above will see more upside

Major Support and Resistance Levels:

Support - 113.14 (5-DMA), Resistance - 113.97 (20-DMA)

Summary: USD/JPY is extending previous session's gains. Watch out for break above 21-EMA for further gains.