Current trend

The USD/JPY pair has been rising for the sixth week, reaching a July high of 152.70. The yen is under pressure amid the expected preservation of monetary policy parameters at the Bank of Japan meeting next week.

Previously, experts hoped that the regulator would continue raising interest rates, supporting the yen. However, after Prime Minister Shigeru Ishiba actively spoke out against such steps, most market participants changed their minds. In addition, consumer price growth remains fragile. Thus, October Tokyo metropolitan inflation data due out on Friday may fall to 2.1% from 2.2% YoY and the core index — from 2.0% to 1.7%, below the regulator’s target. It will increase the prospect that policymakers will leave borrowing costs unchanged, putting pressure on the yen.

The dollar is supported by stronger market confidence in a more cautious US Fed’s rate adjustment as inflation slows slower than expected. While earlier, investors expected the US Fed to cut it by –50 basis points, most analysts now expect a cut of only 25 basis points, according to the Chicago Mercantile Exchange’s (CME) FedWatch Instrument. The currency is supported by the increased probability of victory in the presidential election for Republican candidate Donald Trump, who traditionally advocates for a strong dollar.

In general, fundamental conditions favor the growth of the USD/JPY pair in the medium term.

Support and resistance

The trading instrument is currently close to 153.12 (Murrey level [ 1/8]), after which an increase to the area of ​​156.25 (Murrey level [ 2/8]) and 159.37 (Murrey level [7/8], D1 may follow. In the event of a breakdown of 150.00 (Murrey level [8/8]), the decline may resume to the area of ​​146.87 (Murrey level [7/8]) and 143.75 (Murrey level [6/8], the lower line of Bollinger Bands).

Technical indicators point to the formation of an upward trend: Bollinger Bands and Stochastic are directed upward, and the MACD histogram is increasing in the positive zone.

Resistance levels: 153.12, 156.25, 159.37.

Support levels: 150.00, 146.87, 143.75.

Trading tips

Long positions may be opened above 153.12, with the targets of 156.25, and 159.37 and stop loss of 151.00. Implementation period: 5–7 days.

Short positions may be opened below 150.00, with the targets of 146.87, 143.75, and stop loss of 152.20.