Current trend

During the Asian session, the USD/JPY pair is strengthening following the growth of the US dollar and is approaching 144.80.

The US currency is supported by the Q1 data on the dynamics of gross domestic product (GDP), which showed the economy grew by 2.0%, well above the previous estimate of 1.3%. Thus, forecasts for a recession in the country look untenable, despite the high interest rate of the US Federal Reserve at 5.25%. Against this background, the regulator may continue to tighten monetary policy at a meeting on July 26, which will once again strengthen the dollar. Also, initial jobless claims for the week of June 23 decreased from 265.0K to 239.0K, while analysts expected 265.0K, and the continuous jobless claims for the week of June 16 – from 1.761M to 1.742M against 1.765M forecasted: the labor market shows resilience and allows the financial authorities to keep the “hawkish” rhetoric.

Japanese economy maintains low inflation: June Tokyo’s core consumer price index was released today and amounted to 3.2% YoY, below the forecast of 3.3%, allowing the national regulator to leave the interest rate at –0.10% for some more time. The volume of industrial production in May decreased by 1.6% MoM, contributing to the weakening of the national currency and the strengthening of the USD/JPY pair.

At the moment, there are no fundamental reasons for a trend reversal, and as long as the Bank of Japan adheres to an ultra-soft monetary policy, the general uptrend in the pair will continue, and investors can only count on technical corrections.

Support and resistance

The long-term trend is upward: after the breakout of 142.15, the trading instrument moves towards the target at 145.50, after reaching which, large purchases may be closed, and the price may correct to the area of 142.15–141.15. In case of its breakout, the growth will continue to 148.75.

The medium-term trend is upward, and after overcoming zone 2 (141.04–140.45), the target became zone 3 (146.41–145.86), and the key support for the trend shifts to the area of 139.72–139.21: if the quotes reach it, long positions with the target at the maximum current week 145.00 will become relevant.

Resistance levels: 145.50, 148.75.

Support levels: 142.15, 141.15, 138.70.

Trading tips

Short positions may be opened from 145.50 with the target at 142.15 and stop loss around 146.70. Implementation period: 9–12 days.

Long positions may be opened above 146.70 with the target at 148.75 and stop loss around 145.70.