Dollar/yen continued gaining ground as the US advanced on tax cuts and the data wasn’t bad enough to halt the Fed from raising rates. Japan’s GDP disappointed, and added to the pair’s gains. The upcoming week features the Fed as the main dish. Will the pair try to break to higher ground? Update: The Senate approved the bill by 51 to 49. USD/JPY fundamental movers Trump tax cuts trump everything After the Senate approved their own version of the tax cuts, Republicans are getting closer to reaching a full approval of the bill and the conference process is moving forward. This boosts the stock markets and the dollar as well. If everything works to plan, the bill could be approved by the end of the year. The jobs report was mixed, with a great gain in jobs, 228K but wages remain stuck at 2.5% y/y. This hurt the dollar, but will not halt the Fed. Fed decision, CPI and retail sales The last rate decision of the year is Yellen’s last post rate decision press conference. The Fed is expected to raise the interest rate by 0.25% and they telegraphed it very clearly. They will probably leave the dot-plot unchanged by forecasting 3 rate hikes in 2018. If we get no changes from the Fed, retail sales and inflation figures could take centre stage. These are key figures that could shape monetary policy. Inflation remains low and if it persists, the Fed will find it hard to raise rates further. In Japan, the Tankan survey numbers will be of interest, but the BOJ is unlikely to change its policy anytime soon. See all the main events in the Forex Weekly Outlook Key news updates for USD/JPY [do action=”autoupdate” tag=”USDJPYUpdate”/]USD/JPY Technical Analysis 115.35 is an old line that served as support when the pair traded on higher ground. 114.50 is the cycle high last seen in early July. The pair got close to that level. 113.50 was a temporary line of resistance on the way up in July. 113.70 was a separator of ranges in June. 112.20 used to be important in the past. It is closely followed by 111.70, which provided support back in October. The round level of 111 worked as a cushion to the pair in November. Looking down, 110.70 was a separator of ranges in June and remains important. 109.60 was a gap line in late April, a gap that was never closed. In June, the pair found support several times at 109.10 and this also works as support. Further below, the cycle low of 108.10 is of high importance. USD/JPY Daily Chart USD/JPY Sentiment I am bearish on USD/JPY Even with the expected rate hike, low inflation numbers could weigh on the dollar. In addition, the pair is trading on high ground, and recent movements suggest that the pair could drop back to range. Our latest podcast is titled A December to remember for EUR/USD Further reading: EUR/USD forecast – for everything related to the euro. GBP/USD forecast – Pound/dollar projections AUD/USD forecast – analysis for the Aussie dollar. USD/CAD forecast – Canadian dollar predictions Safe trading! Yohay Elam Yohay Elam Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile View All Post By Yohay Elam MajorsUSD JPY Forecast share Read Next EUR/USD: Balance Of Risks Into Next Week’s ECB – Nomura Yohay Elam 5 years Dollar/yen continued gaining ground as the US advanced on tax cuts and the data wasn't bad enough to halt the Fed from raising rates. Japan's GDP disappointed, and added to the pair's gains. The upcoming week features the Fed as the main dish. Will the pair try to break to higher ground? Update: The Senate approved the bill by 51 to 49. 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