Current Trend

The USD/JPY has paused its decline at the support level of 143.92 after the release of economic data and a speech by Bank of Japan Deputy Governor Ryozo Himino.

The leading index in June was 109.0, down from 111.1 previously, while the coincident index reached 113.2, down from 113.7 and the previous 117.1, as the interest rate hike is harming overall economic activity. Himino noted that the regulator will adjust the pace of monetary policy tightening if there are signs of faster implementation of economic recovery forecasts and stabilization of consumer prices. Investors perceived the official’s rhetoric as a “dovish” signal, which ultimately led to some weakening of the yen.

Meanwhile, at the Jackson Hole Economic Symposium, US Fed Chairman Jerome Powell said it was time to adjust monetary policy, without specifying when or how much interest rates could be lowered. It was agreed upon by San Francisco Federal Reserve Bank (FRB) President Mary Daly. In her opinion, it would be possible to start by reducing the cost of borrowing by 25 basis points, which is confirmed by the readings of the Chicago Mercantile Exchange (CME) FedWatch Instrument: markets are confident that the interest rate will be adjusted by exactly this amount at the September meeting.

Support and resistance

The long-term trend is downward. This week, the trading instrument is testing the support level of 143.92, and if it holds, an upward correction to the resistance level of 149.25 will begin, after which sales, with the targets of 143.92 and 140.80, are relevant.

The medium-term trend is upward. Within the correction, the price reached the key trend support area of ​​143.89–143.38, after holding which, growth may reach the August high of 149.40, and then zone 2 (152.23–151.65). In case of a breakout of the support area, a decline to ​​138.78–138.30 is likely.

Resistance levels: 149.25, 152.40, 154.80.

Support levels: 143.90, 140.80, 137.63.

Trading tips

Long positions may be opened from 143.90, with the target at 146.50 and stop loss 142.90. Implementation period: 9–12 days.

Short positions may be opened below 142.90, with the target at 140.80 and stop loss 143.90.