Current trend

The USD/JPY pair has been growing since mid-September and is testing 156.25 (Murrey level [6/8]) amid the increased likelihood of a slowdown in the US Fed’s monetary easing.

The October consumer price index accelerated from 2.4% to 2.6% YoY and the producer price index – from 1.9% to 2.4%. At the same time, the head of the regulator, Jerome Powell, said that economic growth, a stable labor market, and inflation allow officials to move to a more cautious reduction in interest rates, which increased investor concerns about the possibility of abandoning the December reduction in borrowing costs and supported the American dollar against alternative assets.

The yen is under pressure from poor macroeconomic data. According to preliminary statistics, the Q3 gross domestic product (GDP) slowed from 0.5% to 0.2% QoQ and 2.2% to 0.9% YoY due to a capital investment reduction. Experts fear that the negative impact on the economy will increase due to the slowdown in China’s GDP and the introduction of additional import duties by the administration of the new head of the White House, Donald Trump. As a result, the Bank of Japan officials will probably not raise the interest rate soon, and the weakening of the national currency will continue.

Support and resistance

The trading instrument is testing 156.25 (Murrey level [6/8]). The consolidation above will allow it to reach the area of ​​159.37 (Murrey level [7/8]) and 162.50 (Murrey level [8/8]). After a breakdown of the middle line of Bollinger Bands 153.12 (Murrey level [5/8]), a decline to the area of ​​150.00 (Murrey level [4/8]) and 146.87 (Murrey level [3/8]) may follow.

Technical indicators maintain a buy signal: Bollinger Bands and Stochastic are directed upward, and the MACD histogram is stable in the negative zone.

Resistance levels: 156.25, 159.37, 162.50.

Support levels: 153.12, 150.00, 146.87.

Trading tips

Long positions may be opened above 156.25, with the targets of 159.37, 162.50, and stop loss of 154.10. Implementation period: 5–7 days.

Short positions may be opened below the 153.12 mark, with the targets at 150.00, 146.87, and stop loss 152.00.