Current trend

The USD/JPY pair is trading at 150.05, preparing to continue strengthening against Japanese macroeconomic statistics.

Thus, in September, the national consumer price index was –0.3%, worse than the forecast of 0.2% and the previous value of 0.5%, and the core indicator fell from 2.8% to 2.4%, above the calculations of 2.3%. As a result, at the meeting on October 31, the Bank of Japan officials may refuse to tighten monetary policy, which puts pressure on the national currency.

The American dollar is rising at the fastest pace in a year. During the first three weeks of October, the currency added 3.3%, reaching 103.45 in the USDX against geopolitical tensions, expectations of the US presidential election on November 5, and positive economic reports. Thus, initial jobless claims amounted to 1.867K, below the forecast of 1.870K. In addition, the September core retail sales index increased by 0.5% MoM compared to preliminary estimates of 0.1%. The Q3 current estimate of the real gross domestic product (GDP) growth from the Atlanta Federal Reserve Bank (FRB) is at 3.4% against expectations of 3.2%, reflecting a steady national economic recovery. Nevertheless, in September, the volume of industrial production was corrected by –0.3%, worse than the forecast of –0.1%. However, this indicator has shown a near-zero value and did not leave the range of –1.0–1.0% MoM in the last year.

If the American economy further strengthens and the Japanese regulator maintains the interest rate at the previous level, the USD/JPY pair may reach 151.50 and higher.

Support and resistance

The trading instrument is moving in a long-term downtrend. After forming the key support level of 139.58 in September, the price reached the resistance level of 149.25 as part of the correction and broke through it this week. After consolidating above 151.50, the price may reach 154.80.

The medium-term trend is upward. After a breakout of 145.27–144.75 in October, the quotes headed towards zone 2 (151.68–151.04) and zone 3 (158.61–157.91). The key trend support area is shifting to 144.08–143.50. After reaching, long positions with the targets at 146.90 and 150.30 are relevant.

Resistance levels: 151.50, 154.80.

Support levels: 146.47, 141.60, 139.58.

Trading tips

Long positions may be opened from 149.25, with the target at 151.50 and stop loss 148.45. Implementation period: 9–12 days.

Short positions may be opened below 148.45, with the target at 146.47 and stop loss 149.25.