USD/JPY started the new week by testing to break important resistance at 145.00. The dollar continues to be in high demand amid further tightening of the monetary policy by the Fed, as well as a defensive asset.
The Fed is expected to hold two more rate hikes before the end of the year, with a fourth consecutive 75 basis point hike in November. The Bank of Japan, on the other hand, remains committed to a soft monetary policy course and has no plans to abandon its quantitative easing program.
Pressure on the yen was put by the release of macroeconomic statistics of Japan. The index of large enterprises in the third quarter has decreased from 9.0 to 8.0 points against the forecast of 11.0. The business activity index of the manufacturing sector has fallen from 51.0 to 50.8 points against expectations of growth of 51.5 points.
Today in the USA the ISM manufacturing index will be released. The decline from 52.8 to 52.2 p. p. is forecasted. In addition, speeches of some FOMC members will be held throughout the day.
USD/JPY Technical analysis
On the daily chart, Bollinger Bands reversed to the upside.
MACD indicator began to decline in the positive area, but still has a fairly strong buy signal.
Oscillator stochastic is flying on the border of overbought area (80%).
In case of breakdown and fixation above the key level of 145.00, we open a buy with Take Profit at 147.00. We also set a stop loss at 144.00.
If the buyers are unable to break above 145.00 then we should wait for the fall, breakdown and fixation of the pair below the support of 144.00. We form short positions with a target at 142.54. Place a stop loss at 144.80.
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