Current trend

The USD/JPY pair shows a moderate decline, retreating from the local highs of May 1 and leveling out the results of the uncertain "bullish" trend that has been observed since the beginning of the current trading week. The instrument is testing 157.15 for a breakdown, while investors are preparing for the publication of macroeconomic statistics from the USA and Japan.

On Friday, Japan will present May data on Tokyo Consumer Price Index: analysts expect that the CPI excluding Fresh Food will accelerate from 1.6% to 1.9%. Also, at 01:50 (GMT 2), the market will receive April statistics on Retail Sales, where growth is expected from 1.2% to 1.9%, and Industrial Production, which is likely to slow down from 4.4% to 0.9%.

The day before, Bank of Japan policy board member Seiji Adachi said that the regulator may increase borrowing costs if a sharp fall in the yen leads to an increase in consumer prices or affects citizens' inflation expectations; the official also added that premature measures should be avoided so as not to increase pressure on national economy. These comments highlight the growing importance of a weak currency in determining the timing of the next monetary policy adjustment.

With the opening of the American trading session, the focus of investors' attention will shift to statistics on the Personal Consumption Expenditures - Price Index, which is actively used by the US Federal Reserve in assessing current inflation risks. According to forecasts, the index will not change in April compared to March adding 0.3% in monthly terms and 2.7% in annual terms, while the Core indicator may increase by 0.3% and 2.8%, respectively. At 14:30 (GMT 2), trading participants will pay attention to the April data on Personal Income and Spending, where the figures are expected to decline from 0.5% to 0.3% and from 0.8% to 0.3%, respectively, which, in turn, will confirm the continuing pressure in the national economy against the background of the long-term course of the "hawkish" monetary policy of the US Federal Reserve.

Support and resistance

Bollinger Bands on the daily chart show a relatively confident growth. The price range expands from above, freeing a path to new local highs for the "bulls". MACD indicator tries to reverse downwards and to form a new sell signal (the histogram is about to consolidate below the signal line). Stochastic shows similar dynamics, being located near its highs, signaling the risks of overbought US dollar in the ultra-short term.

Resistance levels: 157.50, 157.98, 158.43, 159.30.

Support levels: 157.00, 156.50, 156.00, 155.50.

Trading tips

Short positions may be opened after a breakdown of 157.00 with the target at 156.00. Stop-loss — 157.50. Implementation time: 1-2 days.

A rebound from 157.00 as from support followed by a breakout of 157.50 may become a signal for opening new long positions with the target at 158.43. Stop-loss — 157.00.