Current dynamics

The USD/JPY pair is showing a moderate decline, developing an active “bearish” impulse formed the day before: the instrument is testing the 152.30 mark for a downward breakout, updating local lows from November 8.

The US currency has been under pressure in recent days due to expectations of a further reduction in borrowing costs. The minutes of the US Federal Reserve meeting on November 6-7, published the day before, reflected the regulator's readiness for a further gradual reduction in the indicator as inflation risks weaken and employment remains at its maximum level. Analysts note the possible negative consequences of both a rapid easing of parameters and maintaining them at current levels for too long, which will contribute to a further slowdown in economic activity. At the same time, October inflation data reflected its acceleration in annual terms from 2.4% to 2.6%. The rest of the macroeconomic statistics published the day before also did not contribute to the development of “bullish” sentiments on the instrument: the business activity index in the manufacturing sector of the Federal Reserve Bank of Richmond in November remained at the same level of -14.0 points, contrary to forecasts of -10.0 points, the volume of sales of new homes in October lost 17.3% after increasing by 7.0% a month earlier, and in absolute terms the sales dynamics slowed from 0.738 million to 0.610 million with expectations of 0.730 million.

On Friday at 01:30 (GMT 2), Japan will release November inflation data for the Tokyo region, with the consumer price index excluding food likely to rise to 2.1% from 1.8%, giving the BOJ reason to continue its hawkish stance. Also during the day, investors will turn their attention to October data on retail sales, which could be adjusted to 2.2% from 0.5%, and industrial production, which is expected to rise to 3.9% from 1.6%. Earlier data showed that the leading indicator of service sector inflation was around 3.0% in October, which also suggests that the Japanese regulator may adjust the interest rate by 25 basis points at its December meeting. Most experts agree that the national economy will maintain a moderate pace of recovery, and the authorities will manage to keep the consumer price index around the target of 2.0%. This was previously confirmed by the head of the Bank of Japan Kazuo Ueda, who said that the economy is moving towards stable inflation, due to stable wages, which, in turn, will lead to an increase in prices not only for goods, but also for services, the cost of which increased by 1.5% in October, accelerating from 1.3% in the previous month.

Support and resistance levels

Bollinger Bands on the daily chart show a reversal to the horizontal plane: the price range is practically unchanged, but it is currently unable to keep up with the surge in bearish sentiment. MACD is declining, maintaining a strong sell signal (the histogram is below the signal line). Stochastic maintains a confident downward direction, but is located near the minimum values, which indicates significant risks of oversold US currency in the ultra-short term.

Resistance levels: 153.18, 153.87, 154.50, 155.50.

Support levels: 152.22, 151.50, 150.50, 150.00.

Trading scenarios

Short positions can be opened after a confident breakout of level 152.22 downwards with a target of 150.50. Stop loss - 153.18. Implementation period: 1-2 days.

A rebound from the 152.22 level as support followed by a breakout of the 153.18 mark upwards may be a signal to open new long positions with a target of 155.50. Stop loss is 152.22.