Current trend

The USD/JPY pair is trading within a long-term uptrend, but this week the price has already sharply adjusted down twice and is now trading around 155.00. Experts believe that this was the result of the intervention of the Japanese government, which sold the dollar to support the exchange rate of the national currency.

Officials are likely to continue to pursue such a policy further, trying to prevent the price from exceeding the 160.0 yen per dollar mark. The expenditure funds of the Japanese Ministry of Finance amount to 1.15 trillion dollars, which will allow up to a dozen more similar operations, but their effectiveness is still unclear since current monetary conditions remain negative for the yen. Recall that the Bank of Japan raised the key rate to 0.10% in March, and the next adjustment in the cost of borrowing is expected no earlier than the second half of the year.

The US Federal Reserve's interest rate is 5.50%, and the US regulator also does not intend to start easing monetary policy in the near future due to rising consumer prices. Yesterday, the head of the department, Jerome Powell, confirmed this position, saying that a new increase in rates is unlikely, but there is also no confidence that the inflation rate will soon slow down to the target of 2.0%, which may lead to a long-term preservation of current borrowing costs.

Thus, in the medium term, monetary conditions will continue to put pressure on the yen, neutralizing the efforts of the Japanese government to contain its decline.

Support and resistance

Technically, the price is around the 156.25 mark (Murrey level [2/8]), consolidating above which will allow quotes to continue rising to 159.37 (Murrey level [3/8]), 162.50 (Murrey level [4/8]). If the level of 153.12 (Murrey level [1/8]) below the central line of Bollinger Bands is broken down, a decline may develop towards the targets of 150.00 (Murrey level [0/8]) and 146.87 (Murrey level [-1/8]), but such a scenario seems less likely.

Technical indicators confirm the continuation of the uptrend: Bollinger Bands are directed upwards, MACD is decreasing, but remains in the positive zone, while Stochastic is pointing downwards, but close to the oversold zone, which may cause an upward reversal.

Resistance levels: 156.25, 159.37, 162.50.

Support levels: 153.12, 150.00, 146.87.

Trading tips

Long positions can be opened above the 156.25 mark with targets of 159.37, 162.50 and stop-loss around 154.20. Implementation period: 5–7 days.

Short positions should be opened below the level of 153.12 with targets of 150.00, 146.87 and stop-loss around 155.20.