Current trend

The USD/JPY pair failed to break the level of 147.00 within an upward correction and is now declining again amid positive Japanese macroeconomic data.

In August, the service PMI remained at 53.7 points, the composite PMI increased from 52.5 points to 52.9 points, and the manufacturing PMI increased from 49.5 points to 52.9 points, supporting the yen. The dynamics of the quotes are influenced by the difference in the monetary policy of the Bank of Japan and the US Fed. The former adheres to “hawkish” rhetoric after raising the interest rate on July 31 by 15 basis points. The next meeting of the regulator is due on September 20, at which the increase in the indicator may continue. The US Fed, in turn, said that the time had come to switch to a “dovish” course. With moderate inflation, the department prefers to support the labor sector and the growth of gross domestic product (GDP) by cutting the interest rate on September 18. According to the Chicago Mercantile Exchange (CME) FedWatch Instrument, the probability of a –25 basis point adjustment is 57.0%, and by –50 basis points is 43.0% and may increase if the cooling of the industry exceeds preliminary estimates. Forecasts assume an increase in August nonfarm payrolls from 114.0K to 160.0, average hourly earnings – from 3.6% to 3.7% YoY and from 0.2% to 0.3% MoM. The unemployment rate may decrease from 4.3% to 4.2%.

In the case of interest rate correction by –50 basis points by the US Fed, the downward dynamics in the USD/JPY pair will intensify, and its target will be the August low of 141.70.

Support and resistance

The trading instrument is declining in the long term. After stopping the upward movement in the resistance area of ​​147.00, the price reversed. Today, it is approaching the support level of 143.90. After a breakdown, the support level of 140.80 and 137.63 may be reached.

The medium-term trend is upward. Last week, the price corrected to the key trend support area of ​​143.89–143.38, after which it began to grow to 146.40. Today, the quotes are falling to the key support level. After a breakdown, the trend will reverse downwards with the target in zone 2 (138.78–138.30).

Resistance levels: 147.00, 149.25, 152.40.

Support levels: 143.90, 140.80, 137.63.

Trading tips

Short positions may be opened below 143.29, with the target at 140.80 and stop loss 144.45. Implementation period: 9–12 days.

Long positions may be opened above 147.30, with the target at 149.30 and stop loss 146.34.