Current trend

During the Asian session, the USD/JPY pair is developing a strong “bearish” trend formed in the short term, testing 142.60 and renewing the lows of the beginning of the year after the Bank of Japan officials decided to raise the interest rate to 0.25%.

Investors did not expect a change in monetary policy since inflation risks remain high, and the labor market does not show significant signs of recovery. However, the price was adjusted twice over the past six months, and the regulator’s representatives do not rule out the possibility of further changes. In addition, financial authorities intend to reduce the volume of government bond purchases to 2.0–3.0T yen per month in the first quarter of 2026 from the current 6.0T yen. The sharp fall in the currency strengthened consumer price inflation, catalyzing the biggest interest rate hike in 15 years, according to the meeting minutes. Still, economists should consider adjusting monetary easing to decrease the risks of higher inflation as companies renew their efforts to pass on rising costs to consumers. The central bank has tried to slow inflation solely through foreign exchange interventions but has failed to achieve a lasting effect. With the yen now at a seven-month high, traders expect BOJ Deputy Governor Shinichi Uchida to comment on the “hawkish” trend when he speaks on Wednesday.

The US nonfarm payrolls report showed a decline from 179K (revised from 206.000) to 114K, significantly worse than the market expectation of 175K. The July hourly earnings slowed from 3.8% to 3.6%, below expectations of 3.7%, and the unemployment rate increased from 4.1% to 4.3%, which led to a sharp revision of forecasts for a 25 basis point interest rate cut in September to 80.0%. The likelihood of another adjustment to the indicator before the end of the year also increases significantly.

Support and resistance

On the daily chart, Bollinger bands are steadily declining: the price range is expanding from below but not as fast as the “bearish” sentiment develops. The MACD indicator is declining, keeping a strong sell signal (the histogram is below the signal line). Stochastic, having reached its lows, reversed horizontally, indicating that the American dollar is oversold in the ultra-short term.

Resistance levels: 143.35, 144.00, 145.00, 146.00.

Support levels: 142.50, 142.00, 141.00, 140.00.

Trading tips

Short positions may be opened after a breakdown of 142.50, with the target at 140.00. Stop loss — 144.00. Implementation period: 2–3 days.

Long positions may be opened after a rebound from 142.50 and a breakout of 144.00, with the target at 146.00. Stop loss — 143.00.