Current dynamics

USD/JPY is recovering from a sharp decline at the end of last week, when the local lows from October 21 were updated: during the Asian session, the pair is testing the 150.65 level on a technically supported upside breakout and ahead of key macroeconomic statistics on the US labour market later in the week.

For example, nonfarm payroll jobs in November are expected to add 183.0 thousand after a revision of 12.0 thousand in the previous month, average hourly earnings on a monthly basis could change from 0.4% to 0.3%, and the unemployment rate would remain unchanged at 4.1%. The University of Michigan Consumer Confidence Index is expected to rise from 71.8 to 72.9 in December. On Wednesday, at 15:15 (GMT 2), the US will release the Automatic Data Processing (ADP) report on private sector employment, with forecasts suggesting a slowdown in November from 233.0 thousand to 165.0 thousand, while at 21:00 (GMT 2) the US Federal Reserve's monthly economic survey, the Beige Book, will be released.

Meanwhile, the yen is being supported by statements by Bank of Japan Governor Kazuo Ueda that borrowing costs could soon be raised from the current 0.25% at a Dec. 18-19 meeting as macroeconomic statistics are in line with regulator expectations. For now, officials will focus on implementing indexation plans announced by U.S. President-elect Donald Trump on import tariffs.

Japan released November inflation data for the Tokyo region on Friday, with the annual consumer price index accelerating sharply from 1.8% to 2.6%, while the index excluding food and energy accelerated from 1.8% to 2.2%. Investors also noted retail sales growth of 0.5% to 1.6% in October, which was weaker than the expected 2.2%, while industrial production rose from 1.6% to 3.0% month-on-month, compared with the preliminary estimate of 3.9%. Business spending accelerated in the third quarter, indicating that strong domestic demand is taking place against the backdrop of a recovery at home, which supports further monetary tightening: capital spending rose to 8.1% year-on-year from 7.4%, and rose 1.7% in seasonally adjusted terms. The data, which will be used to calculate revised gross domestic product (GDP) figures due on December 9, is likely to confirm that the domestic economy is moving in line with the Bank of Japan's forecasts.

Support and resistance levels

Bollinger Bands on the daily chart show a sharp downward reversal: the price range is widening, freeing the bears to make new local lows. MACD is falling, maintaining a strong sell signal (histogram below the signal line). In addition, the indicator is currently trying to consolidate below the zero level. Stochastic, approaching the lows, is trying to head up, signaling in favor of the development of bullish dynamics in the nearest time frames.

Resistance levels: 151.50, 152.22, 153.18, 153.87.

Support levels: 150.50, 150.00, 149.45, 148.24.

Trading scenarios

Long positions can be opened after a confident breakout of the 151.50 level upwards with a target of 153.18. Stop-loss — 150.50. Execution time: 2-3 days.

A bounce from the 151.50 level as a resistance with a downward break of the 150.50 level could be a signal to open short positions with a target of 148.24. Stop-loss — 151.50.