USD/JPY demonstrates multidirectional movements, testing the level of 161.70 again. Yesterday, growth attempts failed due to a lack of drivers for significant movement.
Investors are closely following the statements of the head of the US Federal Reserve, Jerome Powell, who spoke to members of the House of Representatives of Congress the day before. Powell stated his readiness to continue reducing the Fed's surplus balance, which increased significantly during the coronavirus pandemic. However, in his opinion, the regulator will not rush to avoid speculation in the market. US inflation data for June will be released today at 14:30 (GMT+2). Analysts expect a decrease in the annual consumer price index from 3.3% to 3.1%, which may increase the likelihood of monetary policy easing by the end of the year. On a monthly basis, the indicator is expected to grow to 0.1% after the zero dynamics in May.
Japanese statistics published today showed an annual increase in orders for engineering products in May by 10.8%, which significantly exceeded forecasts of 7.2%. On a monthly basis, there was a decrease of 3.2%, with a growth forecast of 0.8%. The price index for corporate goods in June decreased from 0.7% to 0.2% on a monthly basis, which was lower than the predicted 0.4%, but in annual terms the indicator increased from 2.6% to 2.9%, in line with expectations. These data, along with the strengthening of the yen and rising prices for imported raw materials, strengthen investors' confidence that the Bank of Japan can begin to tighten monetary policy. According to Reuters sources, the regulator may adjust economic growth forecasts and confirm that inflation has reached 2.0%.
The Bollinger Band indicator on the daily chart shows moderate growth, although the price range between the lines is narrowing, which indicates mixed dynamics in the short term. The MACD indicator is trying to turn up, forming a buy signal. Stochastic is also growing, but is rapidly approaching maximum values.
It is recommended to open long positions after a confident breakdown up to the level of 162.00 with a target of 163.00. We put the stop loss at 161.30.
When bouncing down from the level of 162.00, followed by a breakdown and consolidation of the price below the level of 161.30, we regard it as a signal to form sales with a target of 159.92. We place a stop loss at 162.00.