Current trend

Last week, the USD/JPY pair corrected downwards and reached four-week lows around 157.36 after the publication of US macroeconomic data.

In June, the consumer price index fell from 3.3% to 3.0% YoY, confirming the weakening of inflationary pressures, while the dynamics of gross domestic product (GDP) are slowing, and the labor market is showing signs of cooling, allowing monetary authorities to adjust the cost of borrowing by –25 basis points in September and strengthening assets alternative to the dollar.

In addition, most analysts are confident that the government intervened in the market situation to stabilize the yen. According to daily operations data, on Thursday, the Bank of Japan directed 3.37–3.57T yen to currency interventions, but there was no confirmation from the government or official comment. The long-term effect of these measures seems limited, as the cost of borrowing in the country remains significantly lower than all major competitors, and further tightening of monetary policy may be very slow.

In these conditions, the resumption of growth of the USD/JPY pair in the medium term is a more likely scenario.

Support and resistance

The trading instrument is trying to leave the long-term ascending channel, testing 157.81 (Murrey level [5/8]), consolidation below which may cause a decline to the area of ​​156.25 (Murrey level [4/8]) and 154.68 (Murrey level [3/8]). In case of a breakout of 159.37 (Murrey level [6/8]), growth to the area of ​​160.93 (Murrey level [7/8]), 162.50 (Murrey level [8/8]), 164.06 (Murrey level [ 1/8]) is expected.

Technical indicators do not exclude upward dynamics: Bollinger bands are directed upwards, Stochastic is approaching the oversold zone, which reflects the probability of an upward reversal, and the MACD histogram is decreasing in the positive zone.

Resistance levels: 159.37, 160.93, 162.50, 164.06.

Support levels: 157.81, 156.25, 154.68.

Trading tips

Long positions may be opened above 159.37 or when after a reversal at ​​156.25, with the targets of 160.93, 162.50, 164.06, and stop losses at 158.25 and 155.00, respectively.