Current trend

The USD/JPY pair is correcting in a sideways trend at 155.14. The American dollar is developing the “bullish” trend formed at the beginning of the week, and the yen is losing its gained position.

The Bank of Japan carried out currency intervention, which, according to experts, amounted to approximately 60.0B dollars, however, there were no official comments on using this mechanism. The yen can be kept from further weakening only by intervening in the market situation since domestic financial indicators are at low levels, and the gap in interest rates between Japanese and American regulators exceeds 5.00%. The April service PMI amounted to 54.3 points, worse than analysts’ forecast of 54.6 points but exceeding 54.1 points earlier, which still could not support the upward dynamics of the yen last week.

The US currency is moving within a corrective trend at 105.30 in USDX, trying to return to upward dynamics, while dollar volatility remains low amid the absence of important macroeconomic publications. The activity of market participants will recover on Thursday after the publication of statistics on initial applications for unemployment benefits at 14:30 (GMT 2), the number of which dropped to the year’s low of 208.0K last week. Today at 13:00 (GMT 2), investors are awaiting data on the 30-year mortgage rate from the Mortgage Bankers Association (MBA), which returned to an upward trend, reaching 7.29% for the first time since early November.

Trading participants also evaluate the dynamics of the IBD/TIPP economic optimism index, which adjusted from 43.2 points to 41.8 points in May, while the market expected 44.1 points, and the volume of consumer lending in March dropped from 14.12B dollars to 6.27B dollars, worse than preliminary estimates of 15.0B dollars.

Support and resistance

On the daily chart, the trading instrument is moving within the ascending channel 158.50–153.00.

Technical indicators are strengthening the buy signal: fast EMA on the Alligator indicator are above the signal line, and the AO histogram is forming corrective bars in the buy zone.

Resistance levels: 156.00, 158.30.

Support levels: 154.30, 151.80.

Trading tips

Long positions may be opened after the price rises and consolidates above 156.00, with the target at 158.30. Stop loss – 155.00. Implementation period: 7 days or more.

Short positions may be opened after the price declines and consolidates below 154.30, with the target at 151.80. Stop loss – 155.00.