Current trend

Against the negative dynamics of the American currency, the USD/JPY pair is correcting at 138.47.

Growth prospects for the Japanese economy are not yet visible, as indicated by the report on the volume of industrial production for May, which reflected a decrease in the indicator by 2.2% after gaining 0.7% a month earlier. The capacity utilization ratio corrected –6.3% from 3.0% earlier to a July 2022 low of 9.2% contraction and the services PMI climbed 1.2%, in line with the prior value and exceeds analysts’ forecasts of 0.4%.

The quotes of the American currency remain under pressure and cannot consolidate above the key level of 100.000 in the USD Index. The main expectations of investors are related to today’s publication of a report on retail sales: the core index in June may increase by 0.3% after 0.1% earlier, and their volume – by 0.5% after increasing by 0.3% last month. If the forecasts come true, the dollar will receive local support.

Support and resistance

On the daily chart, the trading instrument is holding above the support line of the ascending corridor with dynamic boundaries of 146.00–137.00.

Technical indicators maintain a sell signal: fast EMAs on the Alligator indicator are below the signal line, and the AO histogram is forming downward bars in the sell zone.

Resistance levels: 139.40, 142.10.

Support levels: 137.20, 134.30.

Trading tips

Short positions may be opened after the price drops and consolidates below 137.20 with the target at 134.30. Stop loss – 139.00. Implementation period: 7 days or more.

Long positions may be opened after a reversal, growth and price consolidation above 139.40 with the target at 142.10. Stop loss – 138.00.