<p style=““ class=“text-align-justify“>The dollar is mostly steady as major currencies aren’t showing much appetite in European trading so far. That is within reason considering that market players are all eyeing the US CPI data later today before firming up any convictions. But the yen is a notable mover, with USD/JPY being down 1% on the day now to 131.00 as speculative bets mount on the currency ahead of the BOJ policy meeting next week.</p><p style=““ class=“text-align-justify“>This comes after the earlier report <a target=“_blank“ href=“https://www.forexlive.com/centralbank/report-the-boj-will-review-the-side-effects-of-easy-policy-next-week-20230111/“ target=“_blank“ rel=“follow“>here</a>, suggesting that policymakers are set to review the side effects of its easy policy.</p><p style=““ class=“text-align-justify“>The timing of the report makes it tricky to navigate through the pair, as the bond market, dollar and risk sentiment will also factor into play once markets get to the inflation numbers later today. But that won’t be the end of it for USD/JPY, as traders will also then have to consider BOJ risks going into next week.</p><p style=““ class=“text-align-justify“>This feels a bit like a litmus test for the yen and it seems like traders are slowly erring towards the BOJ potentially signaling more intent to move away from its current policy stance.</p><p style=““ class=“text-align-justify“>When you take a look at the Japanese bond market, the supposed dysfunction that the central bank wanted to correct in December arguably hasn’t gotten any better. 10-year yields are pinned at the limit of 0.50% since the end of last week and the BOJ has had to keep stepping in with unlimited bond buying (even at 2-year and 5-year bonds) to maintain order.</p><p style=““ class=“text-align-justify“>That said, this is not to say that the BOJ will surely deliver something for traders or yen bulls to get excited about next week. If anything else, I reckon it could be the other way around where the central bank would disappoint those hoping for them to take further steps away from its current easy policy stance.</p><p style=““ class=“text-align-justify“>However, in the bigger picture, that will very much just be a light setback as there have been plenty of developments suggesting that Japan is slowly pivoting towards a fight against inflation. The trade here to me is not to bank on a sudden major change by the BOJ but instead keep patient as the cog wheels start to turn.</p><p style=““ class=“text-align-justify“>In the case of <a target=“_blank“ href=“https://www.forexlive.com/terms/u/usd-jpy/“ target=“_blank“ id=“54ffc0de-9a7c-4a70-9e2e-73d5d9b2bfee_3″ class=“terms__main-term“>USD/JPY</a>, the more immediate picture sees key technical support and resistance defined by 130.00 and 134.50 to 135.00 respectively:</p><p style=““ class=“text-align-justify“>It will require a break on either side to really set off any extensive moves in the pair next.</p>

This article was written by Justin Low at www.forexlive.com.

<ul><li style=““ class=“text-align-justify“>Inflation is expected to decline from an average of 8.4% in 2022 to 6.3% in 2023</li><li style=““ class=“text-align-justify“>Inflation is then expected to decline to an average of 3.4% in 2024 and of 2.3% in 2025</li><li style=““ class=“text-align-justify“>Headline inflation is expected to fall to the ECB’s medium-term inflation target of 2% in the second half of 2025</li><li style=““ class=“text-align-justify“>But HICP inflation excluding energy and food will remain above 2% throughout the horizon</li><li style=““ class=“text-align-justify“>Risks to the economic growth outlook are on the downside, especially in the near-term</li><li style=““ class=“text-align-justify“>The risks to the inflation outlook are primarily on the upside</li><li style=““ class=“text-align-justify“>Tighter financing conditions would mitigate the build-up of financial vulnerabilities and lower tail risks to <a target=“_blank“ href=“https://www.forexlive.com/terms/i/inflation/“ target=“_blank“ id=“ad51a5a2-1afc-4f42-9e62-ea6faf6f90fa_7″ class=“terms__main-term“>inflation</a> over the medium-term</li><li style=““ class=“text-align-justify“>Interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to the 2% medium-term target</li><li style=““ class=“text-align-justify“><a target=“_blank“ href=“https://www.ecb.europa.eu/pub/economic-bulletin/html/eb202208.en.html“ target=“_blank“ rel=“nofollow“>Full release</a></li></ul><p style=““ class=“text-align-justify“>There’s nothing new here as this is mostly a capsule of views held by the ECB and policymakers have put out such remarks over the course of the past few months already.</p>

This article was written by Justin Low at www.forexlive.com.

<ul><li>2022 GDP growth seen at 2.8% (previously 3.2% in October)</li><li>Q4 2022 GDP growth seen at 1.8% y/y, marking a drop from 3.9% in Q3</li><li>2023 GDP growth seen at 4.9% (previously 5.0%)</li></ul><p style=““ class=“text-align-justify“>Economists see China’s economic growth rebounding modestly next year before steadying in 2024 (growing by 5.0%) with more stimulus on the cards. Here’s a couple of notes from those polled:</p><p style=““ class=“text-align-justify“>“We expect economic activities and consumption to rebound strongly from March-April onwards, helped by post-COVID re-opening and release of excess savings. (But) the lack of large-scale income and consumption stimulus will likely limit the rebound“. — UBS</p><p style=““ class=“text-align-justify“>“Economic policy would turn more supportive in 2023. We expect 11-12% credit growth in 2023 vs 9.6% in 2022, thanks to the window guidance on banks and the improved credit demand. Fiscal policy could also turn more expansionary with a record quota for local government special bonds.“ — Macquarie</p><p style=““ class=“text-align-justify“>In terms of inflation forecasts, the poll showed that consumer inflation in China is likely to rise to 2.3% next year before steadying in 2024.</p>

This article was written by Justin Low at www.forexlive.com.

<ul><li>Prior -10.3%</li><li>Market index 186.7 vs 184.5 prior</li><li>Purchase index 159.4 vs 160.2 prior</li><li>Refinance index 326.7 vs 310.9 prior</li><li>30-year mortgage rate 6.42% vs 6.58% prior</li></ul>

This article was written by Justin Low at www.forexlive.com.

<p style=““ class=“text-align-justify“>That is quite a bizarre event, if ever there was one. I’m finding for details and it seems like this is caused by a failure in the FAA’s NOTAM (Notice to Air Missions) system – which alerts pilots and other flight personnel about hazards or any changes to airport facility services and relevant procedures.</p><p style=““ class=“text-align-justify“>Update: It took the FAA long enough to provide an update but it seems like the system is still down as per the tweet below.</p><blockquote class=“twitter-tweet“><p lang=“en“ dir=“ltr“>The FAA is working to restore its Notice to Air Missions System. We are performing final validation checks and reloading the system now. Operations across the National Airspace System are affected. We will provide frequent updates as we make progress.</p>— The FAA ✈️ (@FAANews) <a target=“_blank“ href=“https://twitter.com/FAANews/status/1613135903010033665?ref_src=twsrc%5Etfw“>January 11, 2023</a></blockquote><p>/<a target=“_blank“ href=“https://www.forexlive.com/terms/u/us-dollar/“ target=“_blank“ id=“fddda8f4-d5f8-4ee4-8e34-3760ed062f3c_1″ class=“terms__main-term“>US Dollar</a></p>

This article was written by Justin Low at www.forexlive.com.

<p class=“MsoNormal“>In terms of technical analysis for the Dow Jones, the <a target=“_blank“ href=“https://www.forexlive.com/news/us-december-non-farm-payrolls-223k-vs-200k-expected-20230106/“ target=“_blank“ rel=“follow“>NFP</a> and the <a target=“_blank“ href=“https://www.forexlive.com/news/ism-december-us-services-496-vs-550-expected-20230106/“ target=“_blank“ rel=“follow“>ISM
Services PMI</a> reports on Friday gave the market the ultimate
push to break the resistance zone that was keeping the market in a rangebound price
action since Christmas holidays. </p><p class=“MsoNormal“>Moreover, <a target=“_blank“ href=“https://www.forexlive.com/centralbank/powell-we-need-to-stick-to-our-mandate-20230110/“ rel=“follow“>Fed
Chair Powell</a> on Tuesday didn’t touch on monetary policy or
recent economic data, leaving the market free to move on its own
expectations.</p><p class=“MsoNormal“>The <a target=“_blank“ href=“https://www.forexlive.com/centralbank/jp-morgan-are-forecasting-lower-than-expected-us-cpi-data-on-thursday-stocks-higher-20230111/“ target=“_blank“ rel=“follow“>US
CPI report on Thursday</a> will be an important event for the market. Another
miss should keep the bullish bias intact as the market will expect the Fed
to hike by 25 bps and pause earlier than expected. </p><p class=“MsoNormal“>A beat shouldn’t bode well for the
sentiment and
raise the odds of another 50 bps hike with the market probably falling going
into the February FOMC meeting.</p><p class=“MsoNormal“>DOW JONES (DJIA) Technical Analysis</p><p class=“MsoNormal“>In the daily chart above, we can
see that the price managed to break up and it’s now testing the old <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>resistance</a> turned <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>support</a>. If the market maintains the
bullish bias and the US CPI on Thursday misses expectations, we can expect
another bullish run to the upside targeting the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>resistance</a> zone around the 35000 price
level. </p><p class=“MsoNormal“>In the 1-hour chart above, we can
see more closely how the price broke out of the 2 weeks long range after the
NFP and ISM Services PMI reports. The price then pulled back to test the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> now turned <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a> and bounced from it as Fed Chair
Powell didn’t offer anything bearish for the market. </p><p class=“MsoNormal“>Zooming in to the 15 minutes
chart, we can see that the recent move to the upside lacks momentum as you
can see from the price <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-divergence-20220429/“ target=“_blank“ rel=“follow“>divergence</a> with the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-relative-strength-index-rsi-20220426/“ target=“_blank“ rel=“follow“>RSI</a>. The price should now pullback
again to the support zone and then two different scenarios may play out: </p><p class=“MsoListParagraphCxSpFirst“>·
The price bounces and starts again its bullish run.
</p><p class=“MsoListParagraphCxSpLast“>·
The price breaks down and starts a fall into the US
CPI report.
</p>

This article was written by ForexLive at www.forexlive.com.

<p class=“MsoNormal“>Following the <a target=“_blank“ href=“https://www.forexlive.com/news/us-december-non-farm-payrolls-223k-vs-200k-expected-20230106/“ target=“_blank“ rel=“follow“>NFP</a> and <a target=“_blank“ href=“https://www.forexlive.com/news/ism-december-us-services-496-vs-550-expected-20230106/“ target=“_blank“ rel=“follow“>ISM
Services PMI</a> data on Friday, in terms of technical analysis, the market continues to
maintain a bullish bias for the Nasdaq Composite. </p><p class=“MsoNormal“>The beat on jobs numbers and miss
on average hourly earnings, gave the market a reason to speculate on a
goldilocks scenario where the labour market remains healthy without wage
inflation. </p><p class=“MsoNormal“>Moreover, the big miss in ISM
Services PMI made the market to expect an earlier pause from the Fed in their tightening
cycle or even earlier cuts. </p><p class=“MsoNormal“>There were some expectations that
<a target=“_blank“ href=“https://www.forexlive.com/centralbank/powell-we-need-to-stick-to-our-mandate-20230110/“ target=“_blank“ rel=“follow“>Fed
Chair Powell</a> could touch on recent economic data or possibly
hint to future monetary policy actions in his speech in Sweden, but he
didn’t offer anything, which kept the market bias intact. </p><p class=“MsoNormal“>The next big event will be the US
CPI on Thursday where another miss may send the market even higher, while a
beat could make it tank.</p><p class=“MsoNormal“>Nasdaq Composite (IXIC) Technical Analysis</p><p class=“MsoNormal“>On the technical side as you can
see in the daily chart above, after the price nearly touched the October low at
10096, it went into a consolidation before breaking up to the upside and now
eyeing the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> zone at 10900-11000. That <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>resistance</a> could decide the next movement. </p><p class=“MsoNormal“>A break to the upside should give
buyers control and the next target would be the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> at 11500 zone. A failure to
break that, will give sellers control and they will eye again the October low
at 10096 if not even lower.</p><p class=“MsoNormal“>On the 1-hour chart above, we can
see that the price went back to the top of the <a target=“_blank“ href=“https://www.forexlive.com/Education/chart-patterns-guide-20220125/“>falling
wedge pattern</a> as that’s usually the target once the price breaks
out of the wedge. The price failed to sustain the bullish momentum and retraced back to
the near-term <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a> (orange line) at 10612 before
continuing its upside move. </p><p class=“MsoNormal“>Drilling down to the 15-minutes
chart above, we can see that the bullish bias remains intact, and the buyers
should now target the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>resistance</a> zone at 10900-11000 as the most
likely scenario. </p><p class=“MsoNormal“>If the price falls and breaks
down the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a> at 10612, that would validate the
2nd scenario and give the sellers more control and the next target
should be the support at 10311 price level. </p>

This article was written by ForexLive at www.forexlive.com.

<p style=““ class=“text-align-justify“>“As far as the losses are concerned, no one has especially seen the caps yet“, says Kremlin spokesman, Dmitry Peskov.</p><p style=““ class=“text-align-justify“>There’s still a large debate going on about whether the caps will have any major impact on Russian oil revenues, but so far the country itself is denying any such speculation.</p>

This article was written by Justin Low at www.forexlive.com.

<ul><li>Prior 91.9</li></ul><p style=““ class=“text-align-justify“>The index falls to a six-month low in December, as inflation and worker shortages remain major impediments for business owners. Of note, it was the twelfth month running that the index holds below the 49-year average of 98. Looking at the details, roughly 32% of owners reported that inflation was their single most important problem – unchanged since November.</p>

This article was written by Justin Low at www.forexlive.com.

<ul><li>2-year Treasury yields +4.2 bps to 4.241%</li><li>10-year Treasury yields +4.4 bps to 3.561%</li><li>30-year Treasury yields +2.6 bps to 3.676%</li></ul><p style=““ class=“text-align-justify“>This is helping to underpin USD/JPY slightly at the moment, with the pair now up 0.2% to 132.15 from around 131.70 levels earlier in the session. There is still a state of flux among major currencies as broader markets remain more cautious and tentative but bonds are slipping a little on the session, with stocks also holding slightly lower.</p><p style=““ class=“text-align-justify“>All eyes are on the upcoming remarks by Fed chair Powell but as mentioned <a target=“_blank“ href=“https://www.forexlive.com/news/tentative-mood-as-markets-await-powell-20230110/“ target=“_blank“ rel=“follow“>here</a>, we might not even get anything significant from Powell later on. As such, just be wary of that possibility and that could very well cause a turn in market sentiment when Wall Street steps into the fray.</p>

This article was written by Justin Low at www.forexlive.com.