Current trend

The USD/JPY pair is showing minor growth, developing a weak "bullish" momentum formed the day before. The instrument is testing 144.70 for a breakout, but the dollar remains without significant support after the official confirmation of the Chair of the US Federal Reserve, Jerome Powell, about his readiness to reduce the cost of borrowing already in September. The official made a similar "dovish" statement at the end of last week as part of the annual Economic Symposium in Jackson Hole. At the same time, Powell did not specify the volume of the upcoming interest rate reduction, noting only that the risks of developing sustainable inflation in the country are gradually being leveled out.

The Bank of Japan, in turn, is considering the possibility of further tightening monetary policy in the event of increased price pressure in the country. This was stated, in particular, by the Governor of the regulator, Kazuo Ueda, while emphasizing that the dynamics in the markets could affect forecasts, as well as the timing of the next adjustments to the cost of borrowing. Last Friday, July statistics on inflation dynamics were presented, recording a 2.8% increase in the Consumer Price Index, while the CPI excluding Food and Energy was adjusted from 2.2% to 1.9%. In turn, the chief economist of the International Monetary Fund (IMF) Pierre-Olivier Gourinchas believes that the Bank of Japan will eventually normalize the loose monetary policy that it has pursued for decades, which will become a driver for the development of the national economy. In the meantime, the fund's experts are confident that, since inflation expectations remain stable and close to 2.0%, monetary authorities will begin to stabilize interest rates again at the next meeting. Japan will release Tokyo CPI data for August at 01:30 (GMT 2) on Friday, with forecasts suggesting the CPI excluding Fresh Food will remain at 2.2%.

Support and resistance

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range expands from below, making way for new local lows for the "bears". MACD is growing, having formed a new weak buy signal (the histogram is trying to consolidate above the signal line). Stochastic remains horizontal, located near the level of "20" and indicating the risks of oversold US currency in the ultra-short term.

Resistance levels: 145.00, 146.00, 147.00, 148.21.

Support levels: 144.00, 143.35, 142.50, 141.68.

Trading tips

Long positions can be opened after a breakout of 145.00 with the target of 147.00. Stop-loss — 144.00. Implementation time: 1-2 days.

A rebound from 145.00 as from resistance, followed by a breakdown of 144.00 may become a signal for opening of short positions with the target at 142.00. Stop-loss — 145.00.