Current trend

This week, the USD/JPY pair resumed growth after a downward correction that began at the beginning of the month.

Next week there will be meetings of the Bank of Japan and the US Federal Reserve, which can seriously affect the market movement. Experts fear that the Japanese regulator will maintain a wait-and-see attitude and will not change the current soft monetary policy, despite rising inflation. Japan’s June CPI data will be released Friday, with the index expected to rise from 3.2% to 3.5% YoY and the core index – from 3.2% to 3.3%, which will probably not convince the officials of the need to abandon the “dovish” rhetoric. Earlier, the head of the department, Kazuo Ueda, called for caution in tightening monetary policy since it is inappropriate to deprive the national economy of incentives during the global crisis. The prospect of maintaining negative interest rates and controlling the bond yield curve at least until the end of the year weakens the yen.

Meanwhile, US Federal Reserve officials are ready for a new increase in the interest rate of 10 or 25 basis points this month, but further actions remain uncertain: most experts hope that the regulator will move to maintain interest rates at current levels, reducing the risks of a recession in the American economy and supporting the position of the dollar.

Support and resistance

The trading instrument reversed at the lower border of the rising trading channel around 137.50 (Murrey level [4/8]) and started growing towards 140.62 (Murrey level [6/8]) and 142.18 (Murrey level [7/8], middle line of Bollinger Bands). The key “bearish” level is 137.50, consolidation below which will lead to the exit of the quotes from the ascending channel and decrease to 135.93 (Murrey level [3/8]) and 134.37 (Murrey level [2/8]).

Technical indicators do not give a single signal: Bollinger bands are reversing downwards, the MACD histogram is stable in the negative zone but Stochastic has reversed upwards.

Resistance levels: 140.62, 142.18.

Support levels: 137.50, 135.93, 134.37.

Trading tips

Long positions may be opened from the current level with the targets at 140.62, 142.18 and stop loss around 139.00. Implementation period: 5–7 days.

Short positions may be opened below 137.50 with the targets at 135.93, 134.37 and stop loss around 138.50.