USD/JPY: forecast for December 14-20
USD/JPY broke below the bottom of its monthly range in the 122.20 area. Lower commodity prices increased demand for the yen as a safe haven making the pair decline. In addition, there were some positive surprises in Japan’s economic statistics. The best news was that Japanese GDP growth for Q3 was revised up from -0.2% to +0.3%. As a result, the nation is no longer in technical recession.
Pay attention to Japanese Tankan manufacturing & services indexes on Monday. On Friday there will be the Bank of Japan’s meeting and press conference. The central bank is expected to keep monetary policy unchanged, and that should support the yen. The upcoming meeting of the Federal Reserve on Wednesday will surely also influence the pair: the impact of the rate hike should be positive in the short term, though we don’t think that it will give dollar much strength.
Support is at 121.45 (top of the weekly Ichimoku Cloud). Failure here will bring the pair down to 120.70, 120.20 opening the way down to 119.00. Resistanceisat 123.60.