Current trend

The USD/JPY pair has been actively growing this week and is currently testing the 146.87 mark (Murrey level [3/8]).

The yen came under serious pressure after a series of statements by the new Prime Minister of Japan, Shigeru Ishiba, implying the possibility of abandoning a long-term tightening of monetary policy: after a meeting with the head of the Bank of Japan (BoJ), Kazuo Ueda, the official said that the economy is not yet in the conditions that would allow interest rates to rise again. Nevertheless, inflationary pressures are growing, reducing household incomes, and in order to correct this situation, Isiba intends to use more traditional ways of supporting the population – emergency loans, subsidies, and others. This position of the new Prime Minister significantly increases the likelihood of a prolonged suspension of the increase in borrowing costs by the BoJ and may negate the efforts of the previous cabinet to stabilize the national currency.

At the same time, the US dollar is receiving support against the background of a possible slowdown in the pace of interest rate cuts by the US Federal Reserve. On Monday, the head of the regulator, Jerome Powell, said that the two remaining cuts in the cost of borrowing this year (in November and December) could amount to 25 basis points each, although investors believed that at least one of them would reach 50 basis points. A significant easing of monetary policy is also hindered by the latest data from the labor market, confirming an improvement in its condition: according to calculations by Automatic Data Processing (ADP), employment increased by 143.0 thousand in September, with expectations of 124.0 thousand. If today's federal labor market data also turns out to be strong, the USD/JPY pair may continue its upward movement.

Support and resistance

Technically, the asset is testing the 146.87 mark (Murrey level [3/8]), consolidating above which will allow quotes to continue growing to the levels of 150.00 (Murrey level [4/8]), 153.12 (Murrey level [5/8]). The key for the "bears" is the 140.62 mark (Murrey level [1/8]), which the pair had already unsuccessfully tested a month earlier. Its breakdown will ensure the development of downward dynamics towards the targets of 137.50 (Murrey level [0/8]) and 134.37 (Murrey level [0/8]).

Technical indicators do not give a clear signal: Bollinger Bands have switched to a horizontal movement after a decline, Stochastic is directed upwards, but is approaching the overbought zone, and MACD is preparing to move into a positive zone and form a buy signal.

Resistance levels: 146.87, 150.00, 153.12.

Support levels: 140.62, 137.50, 134.37.

Trading tips

Long positions can be opened above the 146.87 mark with targets of 150.00, 153.12 and a stop-loss around 144.50. Implementation period: 5–7 days.

Short positions should be opened below the level of 140.62 with targets of 137.50, 134.37 and a stop-loss around 142.40.