Current trend

Amid negative dynamics of the American dollar, the USD/JPY pair is correcting in a stable downward trend at 146.85.

Yesterday, the Bank of Japan published a summary of opinions following the monetary policy meeting. Officials note the weakness of the national economy and the need for further work to increase private household consumption, which may be possible due to new tax cut programs. Core inflation may continue to rise, remaining at the upper limit of the target range of 1.0–2.0% in the second half of the year. Pressure on the currency is exerted by a weakening labor market and rising import prices caused by the difference in borrowing costs of the country and trading partners. Among the positive aspects, a narrowing of the interest rate range was noted, which will become even more favorable after the US Fed’s reduction in the indicator and will allow the yen to compete with other world currencies.

The American dollar is trading at 102.90 in USDX, having shown little reaction to the labor market data. Initial jobless claims fell from 250.0K to 233.0K but the total claims increased from 1.869M to 1.875M. The average for the last four weeks is also above the average annual values, having risen from 238.25K to 240.75K.

Support and resistance

On the daily chart, the price is correcting downwards but after renewing the year’s low of 141.80, there is a slight increase.

Technical indicators are holding the sell signal: fast EMA on the Alligator indicator are below the signal line, and the AO histogram is forming downward bars in the sell zone.

Resistance levels: 147.80, 150.70.

Support levels: 146.00, 144.20.

Trading tips

Short positions may be opened after the price declines and consolidates below 146.00, with the target at 144.20. Stop loss — 147.00. Implementation period: 7 days or more.

In case of overcoming resistance and growth of the asset and consolidation of the price above 147.80, with the target at 150.70. Stop loss — 147.00.