After the FX intervention in late October, USDJPY break the high slope uptrend and formed a tight downtrend channel. The incoming change at the Bank of Japan and the possible policy review speeches from economists and next chair candidates support the downward pressures. From the US side, today’s CPI data and the final FOMC of the year might cause major havoc all around the global markets.
Ahead of the incoming storm, USDJPY completed its fifth wave inside the trend channel and looking for a possible breakout. The %23.6 Fibonacci correction line 138 is very close to the upper line of the channel and provides a strong resistance so far. But a possible high enough upside CPI surprise or a hawkish FOMC could easily lead to an upside breakout and open the door to the middle point of the recent fall, 142.80.
On the other hand, milder CPI and dovish FOMC might jeopardize the 200-day moving average and further increase the bearish pressures, at least until the Bank of Japan’s meeting.
