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Meanwhile, the Fed's closely looking gauge of inflation rose 1.6% on annualized basis, while on a monthly basis core PCE Price Index inched higher 0.2%, meaning that consumers are buying goods and services, thus stimulating the economy. In October, consumer spending, which accounts for more than two-thirds of US economic output, rose 0.2% after being flat a month earlier, the Commerce Department said. Low gasoline prices as well as a firmer labour market are bolstering consumer spending, which should help to shield the economy from slowing growth in China and the Euro zone, as well as a recession in Japan.
At the same time Japanese Yen's stop might be set for a rebound. After plunging 14% since mid-year, the Japanese Yen's drop is about to stop, the former Minister of Finance Eisuke Sakakibara said. He believes that the nation's currency is unlikely to hit its low of 124.14 per Dollar in the run-up to the financial crisis in June 2007. The Yen fell to the lowest level in seven years of almost 119 last week after more than one year of massive monetary easing by the Bank of Japan. Sakakibara also highlighted that the Japanese economy is not that weak despite the fact that negative impact of April's sales tax appeared to be prolonged. Thus, eventually, the tax increase will loosen its chocking impact on the world's third biggest economy and the Yen will start strengthen.
Lack of volatility expected due to bank holiday in US
Thursday is a bank holiday for US, as they celebrate Thanksgiving Day. However, there are important data released in Japan that could affect the market. Most likely the volatility will elevate around 23:30 GMT on Thursday, when Japan's household spending, unemployment rate and Tokyo Core CPI will be released. Moreover, 20 minutes later Japanese prelim industrial production and retail sales will be announced.{ATTACHMENT}
USD/JPY continues to trade around this year's highs
At the first half of the year USD/JPY was trading almost completely flat, as it traded around the 102 level. However, at the second part of August the Greenback started to outperform the Japanese peer rather heavily. At the moment the pair has reached the 118/119 mark and for the time being it is supported by the weekly PP and monthly R2 at 117.41/29, if this level holds then we might see the pair climbing even higher. Nonetheless, in case these levels do not hold the selling pressure then the pair is likely to slide towards the monthly R1 at 114.82.Daily chart
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At the mean time, taking a look to hourly chart for the shorter term outlook. It seems that the USD/JPY currency pair decided to start moving away from the 118 major level, around which it hovered for past five days. As the decision was taken in favour of US dollar's decline, the pair was immediately stopped by the weekly R1 and monthly R2 at 117.30. For the time being the continuation of a downtrend looks highly unlikely, taking into account these strong supports and bullish technical studies in the short and medium-term.
Hourly chart
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