Current trend

The USD/JPY pair is correcting after a three-day upward trend, testing 142.18 (Murrey level [7/8]).

The quotes of the yen were supported by the rhetoric of the financial authorities, who refuted the possibility of the Bank of Japan soon abandoning the current “ultra-dovish” course of monetary policy. Thus, Minister of Finance, Shinichi Suzuki, at a meeting with reporters noted that the latest decision will increase the sustainability of monetary easing, and Minister of Economy, Shigeyuki Goto, said that the introduction of flexibility in controlling the yield curve of government bonds does not indicate a change in the position of the department.

US Federal Reserve officials are nearing the end of their monetary tightening cycle as the national labor market shows signs of cooling. Today, the July employment data from Automatic Data Processing (ADP) will be published: if the statistics justify the forecast of a slowdown in growth from 497.0K to 189.0K, the regulator will have one more argument in favor of a pause in the correction of borrowing costs, which, in turn, will put pressure on the dollar.

Support and resistance

The trading instrument is testing 142.18 (Murrey’s level [7/8]), a breakdown of which will allow it to reach 140.62 (Murrey’s level [6/8], the middle line of Bollinger bands) and 139.30 (Fibonacci retracement of 38.2%). The key for the bulls is 143.75 (Murrey level [8/8]), after consolidation above which the price may rise to 145.31 (Murrey level [ 1/8]) and 146.87 (Murrey level [ 2/8]).

Technical indicators do not give a single signal: Bollinger bands are directed downwards, Stochastic has reached the overbought zone and may reverse downwards, and the MACD histogram is increasing in the positive zone.

Support and resistance

Resistance levels: 143.75, 145.31, 146.87.

Support levels: 142.18, 140.62, 139.30.

Trading tips

Short positions may be opened below 142.18 with the targets at 140.62, 139.30 and stop loss around 143.05. Implementation period: 5–7 days.

Long positions may be opened above 143.75 with the targets at 145.31, 146.87 and stop loss around 142.60.