Current trend

The USD/JPY pair is correcting in a stable downward trend at 154.58: investors perceive the current rise in the yen as a correction caused by the Bank of Japan’s currency interventions.

Meanwhile, macroeconomic statistics remain poor. The core consumer price index, compared to the same indicator a year earlier, remained at 2.1%, having increased from 1.8% in May, the July Manufacturing PMI corrected from 50.0 points to 49.2 points, and the services PMI from 49.4 points to 53.9 points. Experts believe that Japanese politicians are increasingly concerned about the weakness of the national currency, and they are trying to put pressure on the regulator to increase the cost of borrowing. However, at the meeting on July 31, department officials are likely to keep interest rates at the current level and will move on to changes in monetary parameters only in the fall.

The American dollar is trading at 104.10 in USDX, practically unaffected by the June report on existing home sales, which declined from –0.7% to –5.4% or from 4.11M to 3.89M, reaching the year’s low. Today at 16:00 (GMT 2), data on new home sales is due, recording the number of residential buildings sold over the past month and is one of the most important indicators of the US construction market. Preliminary estimates suggest a correction from 619.0K to 639.0K previously.

Support and resistance

On the daily chart, the trading instrument left the limits of the multi-month ascending channel 163.00–156.00, moving away from the support line. Technical indicators have given a sell signal: fast EMA on the Alligator indicator are below the signal line, and the AO histogram is forming correction bars in the sell zone.

Resistance levels: 155.40, 157.70.

Support levels: 154.10, 151.80.

Trading tips

Short positions may be opened after the price declines and consolidates below 154.10, with the target at 151.80. Stop loss is 155.50. Implementation period: 7 days or more.

In case of overcoming resistance and asset growth and consolidation of the price above 155.40, with the target at 157.70. Stop loss is 154.00.