Current trend

After reaching 150.00, the USD/JPY pair is under pressure from corrective sentiment for the American dollar, as well as expectations for the publication of the September report on the US labor market on Friday.

The sharp strengthening of the yen on Tuesday was caused by the decision of the Bank of Japan to conduct currency interventions to support the exchange rate, which, in turn, caused downward dynamics in the USD/JPY pair from 150.00 to 147.50 but now, the trading instrument is actively restoring its positions. Earlier, Finance Minister Shunichi Suzuki said that the bank was ready to intervene in the formation of the yen exchange rate if necessary to prevent the asset from growing above 150.00. Experts are inclined to believe that currency interventions if they occur, would only have short-term consequences since they are not supported by fundamental factors. Against this background, analysts suggested that the regulator may abandon the policy of negative interest rates as early as January 2024.

Macroeconomic statistics put pressure on the yen on Friday: wages rose by 1.1% in August, coinciding with the revised dynamics of last month, although analysts expected a more robust growth of 1.5%. Household spending adjusted by –2.5% after –5.0% in July compared to forecasts of –4.3%. The index of coinciding indicators increased from 114.2 points to 114.3 points, and leading indicators – from 108.2 points to 109.5 points, better than the calculations of 109.0 points.

The long-term trend remains upward: the trading instrument reached 150.00 and corrected to 147.50, after testing which growth resumed to the target of 150.50, and then to 155.50. The RSI indicator (21) signals a possible correction, as there is a discrepancy between the price and indicator charts, however, until the Bank of Japan moves to tighten monetary policy, a significant decrease is not expected.

The medium-term trend is upward: last week, zone 2 (148.53–147.96) was broken, and the next target was zone 3 (153.98–153.41). The key support for the trend is shifting to 144.93–144.43, and if it is reached, long positions with the target at the current week’s high of 150.03 are relevant.

Support and resistance

Resistance levels: 150.50, 155.50.

Support levels: 147.45, 144.75, 141.70.

Trading tips

Short positions may be opened from 150.50 with the target at 147.45 and stop loss around 151.50. Implementation time: 9–12 days.

Long positions may be opened above 151.50 with the target at 153.50 and stop loss around 150.50.