On Wednesday, the USD/JPY pair fell and reached new local lows. The US Dollar is unlikely to gain back most of its losses at the end of the week.
Uncertainty around future monetary policy in the US is growing. Though most analysts expect a rate hike at the upcoming Fed meeting, some traders are taking profits on the USD long positions since they suggest such a decision has already been priced into the markets.
At the same time, the Japanese currency is being supported by favorable macroeconomic statistics. On Tuesday, the JPY strengthened amid the publication of GDP data for the third quarter. The indicator grew by 1.0%, notably above the forecast of 0.1%. Furthermore, on Wednesday, the currency gained support from Core Machinery Orders statistics for October.
Support and resistance
Bollinger Bands indicator on the daily chart is turning down. The price range is widening, but the price remains out of its borders. MACD keeps its strong downward trend. Stochastic is approaching the border of the oversold zone.
It is recommended to wait for clearer trading signals.
Support levels: 121.00 (near 9 December low), 120.56, 120.34, 120.00 (strong psychological level near 28 October low), 119.62, 119.39.
Resistance levels: 121.48, 122.00, 122.22 (used to be the lower border of a flat channel), 122.60, 122.93, 123.25, 122.66 (2 December high).
Long positions can be opened if the price turns up and overcomes the level of 122.00 with targets at 122.65, 123.00 and stop-loss at 121.70. Validity – 2-4 days.
Short positions can be opened after the breakdown of the level of 121.30 with the target at 120.00 and stop-loss at 121.60. Validity – 2-3 days.