Technical Outlook: USDJPY has been stuck within the 118.00 – 116.80 resistance level for most of last week with the Stochastics strongly positioned in the overbought levels. However, this could signal a short term consolidation on the daily chart. There is a potential for an upside squeeze towards 118.20 with the next main resistance coming in only at 119.50. To the downside, a break down below 116.80 could signal a move towards the first support at 111.27 followed by 106.90 – 106.58 support zone. It is best to stay on the sidelines for USDJPY at the current levels and instead wait for a reversal near the 116.80 resistance or to wait for price to post another high towards 119.00.
Fundamental Outlook: Data from Japan this week will see the inflation figures coming out. Overall, economists forecast another weak month of slow inflation reading. The BoJ’s core CPI is set to rise only 0.2%, slower than the 0.3% increase seen in October. However, there is scope for an upside surprise on higher oil prices and also the weaker yen which has fallen significantly in November. The yen is unlikely to react much to the news as the December inflation data which is due later in January could see some strong recovery.
Previous USDJPY Weekly Forex Forecast
USDJPY Weekly Forex Forecast – 26th to 30th Dec 2016 – Bearish
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