FxWirePro: USD/JPY Daily Outlook

Chart - Courtesy Trading View 

Spot Analysis:

USD/JPY was trading 0.48% lower on the day at 133.81 at around 07:50 GMT.

Previous Week's High/ Low: 137.47/ 130.56

Previous Session's High/ Low: 134.50/ 133.34

Fundamental Overview:

US dollar under pressure as yields retreat despite China Covid woes.

Risk-off flows dominate and boost the safe-haven demand for the Japanese Yen amid the end-of-the-year thin market conditions.

Fresh Covid-linked prerequisites for Chinese travelers and doubts over Beijing’s reporting of data along with a  jump in the virus numbers weigh on sentiment.

On the data front, US Pending Home Sales for November dropped to -37.8% YoY versus -36.7% expected and -37.0% previous readings.

The Richmond Fed Manufacturing Index for December improved to 1.0 versus -4.0 anticipated and -9.0 prior.

Further, BoJ conducted unplanned bond-buying twice on Thursday. Yen little affected by the BoJ’s operations.

The BoJ offered to buy unlimited amounts of two- and five-year notes at a fixed yield and also JPY 600 billion yen of one-to-10-year bonds on top of a daily offer to buy 10-year debt at 0.5%

Technical Analysis:

- USD/JPY snaps a 4-day bullish streak

- GMMA indicator shows major trend is bearish, while minor trend is neutral

- Price action is holding above 5-DMA which is biased higher

- MACD confirms bullish crossover on signal line

Major Support and Resistance Levels:

Support - 133.44 (5-DMA), Resistance - 135.35 (21-EMA)

Summary: USD/JPY trades with a neutral bias. Decisive break above 200-DMA will change near-term dynamics.