Current trend

For the second week, the USD/JPY pair has been trading at 151.56 (Murrey level [ 1/8]), unsuccessfully trying to consolidate above it.

The market is uncertain under the influence of several opposing factors. So, on the one hand, investors are disappointed with the position of Bank of Japan officials, who have recently hinted at the need for a pause in the cycle of tightening monetary policy until the middle of the year or until its second half. The national economy, although it was able to avoid a recession in the fourth quarter, is showing slow growth (0.1%) amid the weakness of the manufacturing sector, and in these conditions, putting additional pressure on the gross domestic product (GDP) by increasing the cost of borrowing seems inappropriate even in the conditions stable inflationary growth. The indecisiveness of the regulator’s representatives puts pressure on the yen, supporting the USD/JPY pair.

Significant growth is hampered by the expectation that the US Federal Reserve will begin easing monetary policy soon. In February, the core price index for private consumption expenditures decreased from 2.9% to 2.8%, confirming the continued decline in inflationary pressures in the American economy, and the March purchasing managers’ index for the non-manufacturing sector decreased from 52.6 points to 51.4 points, reflecting the cooling of the country’s most important service sector. Thus, the situation satisfies the requirements of regulator officials, and the first reduction in interest rates is expected in June.

The second factor restraining the asset’s growth is the warning of the Japanese authorities about the possibility of currency interventions due to the excessive yen weakening. Experts believe that the government will begin to act if the value of the American dollar exceeds 155.0 yen.

Support and resistance

The trading instrument is trying to consolidate above 151.56 (Murrey level [ 1/8]), after which growth to the area of 153.12 (Murrey level [ 2/8]) and 156.25 (Murrey level [ 2/8], W1) is possible. If the price overcomes the key “bearish” support zone of 150.50–150.00 (middle line of Bollinger bands, Murrey level [8/8]), the decline will resume to the area of 148.43 (Murrey level [7/8]) and 146.87 (Murrey level [6/8]).

Technical indicators confirm the continuation of the upward trend: Bollinger Bands and Stochastic are directed upward, and the MACD histogram is stable in the positive zone.

Resistance levels: 153.12, 156.25.

Support levels: 150.00, 148.43, 146.87.

Trading tips

Long positions may be opened from 152.00, with the targets at 153.12, 156.25, and stop loss 151.20. Implementation time: 5–7 days.

Short positions may be opened below 150.00, with the targets at 148.43, 146.87, and stop loss 151.20.