The ongoing trend

After reaching 156.3, the USD/JPY currency pair reached the support of 153.83 and updated the low of November 19 during the morning session today: further upward momentum of the yen is clearly limited, as investors try to predict further moves by the Bank of Japan after the release of inflation data.

The national consumer price index reached 2.3% y/y in October, beating the 2.2% y/y forecast, which could affect the regulator's interest rate decision on December 19, but it is not certain. On the one hand, BoJ policymakers have repeatedly said they will continue to tighten monetary policy parameters, but at the last meeting, borrowing costs remained at 0.25 percent. If inflation exceeds both the Bank of Japan's forecasts and expectations, the agency's rhetoric could become more hawkish: most experts surveyed by Reuters still believe the regulator would adjust the interest rate by 25 basis points. Meanwhile, the business activity index for the services sector changed from 49.7 to 50.2 points; for manufacturing from 49.2 to 49.0 points, and the overall indicator from 49.6 to 49.8 points. In November, the manufacturing index compiled by Jibun Bank fell to 49.0 from 49.2, below analysts' average forecast of 49.5, confirming continued pressure on the sector.

Although the long-term trend is heading south, the price is currently moving in the range between the levels of 156.53 and 153.83. After overcoming the resistance line of 156.53, the trend is expected to turn into an uptrend and reach the level of 161.70. In case of consolidation below the support of 153.83, short positions with price targets of 151.40 and 149.25 are possible. The RSI indicator (14) has returned to the neutral zone after reaching the overbought zone at the end of October, so both buying and selling the trading instrument can be considered.

The medium-term trend is upward: in November, the prices reached zone 3 (157.09-156.53) and started a correction with the target in the area of trend support 151.25-150.72, after which long positions with the target of 153.73 and 156.75 are relevant. Otherwise, the medium-term trend will turn downward, with short positions with the target in zone 2 (146.12-145.63) remaining intact.

support and resistance

Supports: 153.83, 151.40, 149.25.

Resistances: 156.53, 161.70.

trading tips

Short positions are intact below 153.35 with target of 151.40 and stop loss at 154.22. Validity: 9-12 days.

Long positions are relevant above 156.94 with a target of 159.45 and a stop loss at 156.10.