There are reasons to believe that Japanese inflation will keep declining, especially given the slumping oil prices. As a result, the market will be expecting new stimulus measures from the Bank of Japan.
Japanese parliamentary elections will be an important topic during the next 2 weeks. Official campaigning will start on Tuesday, Dec. 2. For now Prime Minister’s Abe party is far ahead of its competitors. However, the uncertainty remains as 45% of the voters still haven’t made up their mind.
Japan’s economic calendar will be very light next week. The data that may influence the voters’ mood will come out only on Dec. 8 when the nation releases revised Q3 GDP. According to the initial estimate, Japanese economy contracted by 1.6% on the annual basis.
As a result, USD/JPY will be affected by the 2 sets of factors: on the one hand, the pair will be supported by the expectations of further stimulus from the Bank of Japan, but on the other hand it will be capped by the pre-election uncertainty and the fact that USD is overbought, though as we have recently seen, overbought/oversold technical analysis has become less relevant for this pair. On the H1 chart we may see a pennant which may push the price up to 119.85. Still, the possibility that he pair turns sideways is also high. Support is at 117.20 and 116.50.
Keep long-term longs if you have those. For the correct short-term entry levels follow the daily updates at FXBAZOOKA.com.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.