Last week, the Yen strengthened against the US Dollar, having reached its highs since the beginning of November. Bullish dynamics developed due to a downward correction in the US currency amid Christmas holidays.
Moreover, the Yen gained support from the results of BoJ meeting. The Regulator expects inflation to reach the target level of 2% in the short term.
Friday’s inflation data, released in Japan, managed to confirm the forecast. National Consumer Price Index grew by 0.3% in November, same as in the previous month. At the same time, Unemployment Rate came in at 3.3%, up from 3.1% in October and 0.1% above the forecast.
Support and resistance
Bollinger Bands indicator on the daily chart is falling while the price range is narrowing down actively. MACD keeps a strong downward trend. Stochastic is in the oversold zone and trying to turn up. According to the indicator, an upward correction is possible.
It is recommended to wait for clearer trading signals.
Support levels: 120.34, 120.16 (end of October low), 120.00 (strong psychological level), 119.62, 119.39.
Resistance levels: 120.56, 120.83, 121.00, 121.48 (21 December level), 122.00, 122.22, 122.60, 122.93, 123.25, 123.66 (2 December high), 124.00.
Short positions can be opened at the current level with the target at 118.82 and stop-loss at 120.90. Validity – 2-3 days.
Long positions can be opened after the breakout of the level of 122.00 with the target at 123.80 and stop-loss at 121.50. Validity – 2-4 days.