USD/JPY: what to make of 2017 and dollar outlook, because upside capped for now?

Currently, USD/JPY is trading at 116.45, down -0.64% on the day, having posted a daily high at 117.28 and low at 116.23.

USD/JPY is giving back the mid Dec rally to some extent although the stronger dollar for longer theme is supporting the major from dropping out of the sky and a slight offer is in play in thin trading conditions where moves are exaggerated and the consolidation is under threat.

The 116 handle has held up so far, but we are close to the end of this holiday period and it may be that markets come back in aggressive and bullish with positive optimism for 2017 as Trump takes up the helm motivated to make the US great again. What he proposes should be supportive of the dollar and coupled with a 10trillion shortage on the offshore market in the greenback, the bets are placed for a siege of the 120 handle in time to come. However, there are major risks and headwinds that face the global economy and the dollar may lose some of its shine as the tables turn on Trump's head as markets wake up to the debt problem that the nation faces. More on that in the video below.

USD/JPY levels

Spot is presently trading at 116.45, and next resistance can be seen at 116.52 (Weekly Classic S1), 116.59 (Daily Classic S2), 116.70 (Hourly 20 EMA), 116.89 (Daily Classic S1) and 117.06 (Yesterday's Low). Support below can be found at 116.23 (Daily Low), 116.12 (Daily Classic S3), 115.83 (Daily 20 SMA), 115.68 (Weekly Classic S2) and 114.81 (Weekly Classic S3).