- USD/JPY hovers around 20-DMA at 112.31, we see weakness on break below.
- Price action confined to narrow range ahead of the next week’s monetary policy decision from the Bank of Japan (BoJ).
- BoJ is scheduled to announce its monetary policy decision on Thursday (December 21), we expect policy to be held firmly on hold.
- The central bank is expected to maintain its 'QQE with yield curve control' policy with a negative interest rate.
- RSI and Sctochs are biased lower and MACD is on verge of a bearish crossover on signal line.
- Technical indicators are supportive of downside in the pair. Scope for test of 200-DMA at 111.62 on break below 20-DMA.
- Violation at 200-DMA could see test of 111 levels. While we see bearish invalidation above 50-DMA at 112.85.
- Focus also on U.S. industrial production data later tonight in the NY session along with BoJ.
Support levels - 112, 111.90 (38.2% Fib retrace of 107.318 to 114.737 rally), 111.62 (converged 200-DMA and trendline)
Resistance levels - 112.87 (nearly converged 5 & 50-DMA), 112.98 (23.6% Fib), 113.75 (Dec 12 high)
Recommendation: Good to go short on decisive break below 20-DMA (112.31), SL: 112.85, TP: 111.90/ 111.65/ 111.
FxWirePro Currency Strength Index: FxWirePro's Hourly USD Spot Index was at -128.902 (Bearish), while Hourly JPY Spot Index was at 27.8399 (Neutral) at 0500 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.
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