Current trend

The USD/JPY pair is trading within a long-term uptrend: this week, the price has consolidated above the 159.37 mark (Murrey level [6/8]), however, growth is restrained by a number of opposite factors.

The US currency is supported by comments from US Federal Reserve officials, who, despite the resumption of a decline in inflation in May, still allow for a long-term continuation of the current tight monetary policy. Federal Reserve Governor Michelle Bowman even announced the possibility of a new increase in interest rates if the reduction in inflationary pressure turns out to be insufficient. On the other hand, a significant increase in quotations is restrained by the expectation of the publication on Friday of May statistics on the price index of personal consumption expenditures. If the forecast of a decrease from 2.8% to 2.6% YoY turns out to be correct, the members of the US Fed may soften their position, and a decrease in the cost of borrowing by the end of the year will become more likely, which will lead to a weakening of the dollar.

In addition, investors are afraid of a new intervention in the market situation by Japanese officials, who may launch another round of currency interventions due to the approach of the dollar's value to the key level of 160.00. In general, despite a number of constraining factors, the potential for further growth remains.

Support and resistance

Technically, the asset has consolidated above the 159.37 mark (Murrey level [6/8]), which opens the way for the price to further grow towards the targets of 162.50 (Murrey level [8/8]), 164.06 (Murrey level [ 1/8]). The key for the "bears" is the central line of Bollinger Bands around 157.45, the breakdown of which will allow the quotes to resume their decline to 154.68 (Murrey level [3/8]) and 153.12 (Murrey level [2/8]).

Technical indicators confirm the probability of further growth: Bollinger Bands are directed upwards, MACD is growing in the positive zone, and Stochastic is horizontal in the overbought zone.

Resistance levels: 162.50, 164.06.

Support levels: 157.45, 154.68, 153.12.

Trading tips

Long positions can be opened from the 160.20 mark with targets of 162.50, 164.06 and stop-loss in the area of 158.80. Implementation period: 5–7 days.

Short positions should be opened below the level of 157.45 with targets of 154.68, 153.12 and stop-loss around 159.40.