On Monday, USD/JPY is trading near the key level of 149.50 after testing the 150.00 area last week. Buyers are making attempts to regain the initiative, but so far neither side can strengthen positions. Volatility of currency pairs in the market is low, as traders prefer to wait for the results of the meeting of the Bank of Japan and the Fed.
On Friday, data on inflation in the Tokyo region was released. The indicator rose from 2.8% to 3.3% (y/y). Core inflation also accelerated from 2.5% to 2.7%, refuting the view of the BoJ Governing Council that inflation will slow down in the near future. It is possible that after the report, the regulator will change its view and raise the interest rate at tomorrow's meeting from negative (-0.10%), where it has been since 2016.
The US Federal Reserve will meet on Wednesday. Investors are not expecting a monetary policy adjustment. Inflation in the country continues to decline, so the Central Bank does not need to increase pressure on the economy by monetary restriction.
Technical analysis for USD/JPY for today
On the daily chart, the Bollinger Bands indicator started to turn horizontal. The MACD indicator remains in the positive range, but declined towards the zero line, generating a sell signal. The Stochastic oscillator fell sharply, tested the 20% level from top to bottom, broke through it and entered the oversold area.
In case of price consolidation below 149.30, we open short positions with the target mark of 148.47. Stop loss is set at 149.69.
A break above 149.69 will indicate the continuation of the uptrend. In this case we will buy with a target of 150.50. Stop-loss will be placed at 149.30.