Current trend

The USD/JPY pair is trading at 153.80, near the 152.40 support level, as the Bank of Japan officials decide to intervene in the currency to support the currency.

There is also a possibility that investors are starting to repatriate capital by selling dollar- and euro-denominated assets and buying yen with them after the major U.S. stock indexes weakened: the S&P 500 has fallen by 3.5% this month, while the DJIA has fallen by 1.7%. Meanwhile, the July Tokyo consumer price index has adjusted from 2.3% to 2.2%, while the figure excluding food and energy prices has adjusted from 1.8% to 1.5%. The regulator’s experts fear that a further increase in the cost of borrowing in the context of deflationary risks could put pressure on the country’s economy, while they need to support the national currency, which was recently at record lows at 162.00. On Wednesday, market participants will pay attention to June statistics on industrial production and retail sales, as well as the results of the Bank of Japan meeting. Analysts are almost certain that officials will keep the interest rate at 0.00%.

The long-term is ascending. Last week, within a downward correction, the price tested the key trend support level of 152.40, where it stopped its negative dynamics. Today, the quotes are moving within the channel of 152.40–154.80. After leaving it upwards, the price may reach 157.57. In case of a breakdown of lower border is overcome, the trend will change, and short positions, with the target at ​​146.74–146.17 are relevant. The RSI indicator line (21) is directed downwards, indicating the possibility of continuing the decline. There is still some distance to the oversold area, so making purchases is risky.

The medium-term trend changed to a downward one last week: the price broke the zone of 156.67–156.18 and headed to zone 2 (151.72–151.26). The key resistance of the new trend is shifting to the area of ​​157.39–156.89, after reaching which short positions, with the target at 152.00 are relevant. If zone 2 is broken, a decline to zone 3 (147.08–146.65) is expected.

Support and resistance

Resistance levels: 154.81, 157.57, 161.70.

Support levels: 152.40, 146.74, 146.17.

Trading tips

Long positions may be opened above 152.50, with the target at 157.57 and stop loss 154.70. Implementation period: 9–12 days.

Short positions may be opened below 151.23, with the target at 149.20 and stop loss 152.15.