USD/JPY: forecast for December 21-27
The dynamics of USD/JPY in the past week was determined by the actions of the central banks. Firstly the US Federal Reserve raised the interest rate making the pair go up. Then the Bank of Japan announced some changes to its monetary stimulus measures. However, the market regarded the step taken by the central bank as too small. In short, the BOJ will expand the types of assets it purchases, but the total volume of the program will remain the same. Dollar bulls got disappointed, and USD/JPY was once again rejected down from 123.50. Many failures at this resistance level make it a hard obstacle on the upside.
At the same time, the action taken by the Bank of Japan will remind traders that it is actually conducting a massive monetary easing. Together with higher rates in America, this is a huge supporting factor for USD/JPY. There will likely be further technical decline in USD after the failure on the upside, but support line from 2013 is in the 119.20/00 area. Resistance is at 122.00, 123.50 and 124.00.