Current trend

The USD/JPY pair is testing 144.20 for a breakout. Despite the dollar's weakening last week amid a correction in US borrowing costs, its position is quite stable. This is partly due to statements from the Bank of Japan, which also held a monetary policy meeting last week but decided to keep the interest rate at 0.25%, the highest since 2008, saying it needed more time to monitor financial markets. At the same time, the consumption estimate was revised up, reflecting officials' confidence that the economy will continue to recover sustainably, allowing them to tighten parameters again in the coming months. Bank of Japan Governor Kazuo Ueda made it clear that the regulator will resume its "hawkish" rhetoric if inflation trends meet expectations. Thus, the hopes of market participants for a continuation of the previously set rhetoric do not seem to be justified. The decreased exchange rate of the USD/JPY pair is also affected by the risks associated with the weakness of the Japanese currency, therefore, against the backdrop of forecasts of a further reduction in the interest rate by the US Federal Reserve, the Japanese regulator has several options for implementing monetary policy.

Macroeconomic statistics from Japan released on Friday supported the "bullish" sentiment on the yen, with the National Consumer Price Index rising to 3.0% from 2.8% in August, and the CPI excluding Food and Energy — to 2.0% from 1.9%. The Tokyo Consumer Price Index for September will be released later this week on September 27, with forecasts suggesting that CPI excluding Fresh Food may slow down to 2.0% in September from 2.4%.

At the same time, according to the financial flow report for the second quarter, the volume of assets held by households reached a record 2,212.0 trillion yen, up 4.6% from the same period last year: the positive trend was supported by the growth in the value of stocks and mutual funds amid the rise in the stock market. The figure thus hit a new all-time high for the sixth quarter in a row, while insurance assets increased by 0.6% to 384.0 trillion yen, helped by the weakening yen, which increased the cost of insurance policies in foreign currencies.

Support and resistance

On the daily chart, Bollinger Bands are reversing into a horizontal plane. The price range is trying to consolidate, limiting the potential for further development of the "bullish" dynamics in the ultra-short term. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic is showing similar dynamics, but the line of the indicator is gradually approaching its highs, indicating the risks of overbought US dollar in the ultra-short term.

Resistance levels: 145.00, 146.00, 147.00, 148.21.

Support levels: 144.00, 143.35, 142.50, 141.76.

Trading tips

A downward reversal near the current price levels with a subsequent breakdown of 144.00 may become a signal to sell with the target at 142.00. Stop-loss — 145.00. Implementation time: 2-3 days.

The return of the "bullish" trend with the breakout of 145.00 may become a signal for new purchases with the target of 147.00. Stop-loss — 144.00.