Current trend

During the Asian session, the USD/JPY pair shows upward trading dynamics, preparing to renew the high of October last year of 152.00.

On Thursday, the Japanese government agreed on measures to cushion the economic damage amid soaring inflation, including 17.0T yen (113.0B dollars) in government spending. To finance part of the costs, an additional budget for the current fiscal year of 13.1T yen will be presented: thus, the total package will be 30.1T yen. Taken together, officials estimate the spending plan will increase the nation’s gross domestic product (GDP) by an average of 1.2% over the next three years, and the effect of gasoline and utility subsidies will lower consumer inflation by about 1.0% in January-April of the following year. Experts note that emissions of money supply into the economy create additional supply and may have the opposite effect, which will cause an increase in inflation, as happened in the United States in 2020. Against government interventions, traders prefer to buy the American dollar, getting rid of the yen.

The position of the Japanese currency is slightly pressured by poor macroeconomic statistics. The September household spending indicator changed to –2.8% after –2.5% earlier compared to forecasts of –2.7% and wages adjusted slightly from 1.1% to 1.2%, beating expectations of 1.0%. The index of matching indicators increased from 114.6 points to 114.7 points but the index of leading indicators decreased from 109.2 points to 108.7 points.

Support and resistance

The long-term trend is upward: after a correction to the support level of 149.50, the price rises to the October 2022 high of 152.00, after a breakout of which it may reach 155.50.

The medium-term trend is upward: last week, as part of the correction, the quotes reached the support zone of 149.36–149.13, from where positive dynamics began to develop to the target at last week’s high of 151.66. If it is broken, the asset will head to zone 3 (153.13–152.66). The trend border moves to 147.07–146.64: if the trading instrument corrects to this area, long positions with the target at 151.66 are relevant.

Resistance levels: 152.00, 155.50.

Support levels: 149.50, 147.45, 144.75.

Trading tips

Long positions may be opened from 150.13 with the target at 152.00 and stop loss around 149.50. Implementation time: 7–9 days.

Short positions may be opened below 149.50 with the target at 147.45 and stop loss around 150.20.