Daily Market Recap - USDJPY

The USDJPY has been trading in a very narrow band this week, confined to small movements within a 50 pips range. The pair is up 0.06 percent on Friday, bringing the weekly gains tally to 0.11 percent. Investors have remained on the sidelines in the past trading sessions as markets continue to search for a firm direction.

The pair was unable to gain much attention as current political jitters and an overall strengthening of the US dollar has kept any large swings in check. Earlier this week the US house of representatives voted in favor of impeaching US President Trump. Markets were relatively unfazed by this development although dollar traders were remarkedly upbeat. Given that the final decision on impeachment lies in the hands of the republican controlled senate, it is highly unlikely that this motion will come to fruition. US equity indices ended the week on a strong note by hitting fresh all-time highs, providing a boost to the US dollar. However, continued uncertainty surrounding the US-China trade deal has supported the safe-haven yen.

On Friday, Japan released its National CPI (ex-food & energy) figure coming in above expectations at 0.8 percent, a positive sign for the yen. Monday will have another important economic data release from Japan, the industry activity index, a leading indicator for the Japanese GDP and overall growth figures.

(Chart Source: Tradingview 22.12.2019)

Looking at the USDJPY daily chart, the pair retained its bullish momentum on Friday by staying above the 109.2 marks. The uptrend since mid-October should continue to provide support for the pair. On the downside, we would be looking at a break below the 109.3 support zone, with a target at the short-term moving average in red. Should prices maintain its current trajectory, we could expect a slight pullback in the short run with buying pressure to return around the 78.6 percent Fibonacci level at 109.075. On the upside, traders will have to pay attention to the price reaction around the troublesome 109.7 handles. Strong bullish momentum will be needed to push above the 109.773 resistance level.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.