USD/JPY is testing the 144.20 level for an upward breakout. Despite the past correction of the dollar, its position remains fairly stable, partly due to the decision of the Bank of Japan. Last week, the regulator left the rate at 0.25%, the highest since 2008, explaining the need for a longer—term analysis of the markets. The Bank of Japan also revised its consumption forecast, expressing confidence in the economic recovery and a possible tightening of policy in the coming months. The head of the Bank of Japan, Kazuo Ueda, said that if inflation continues to meet expectations, the Central Bank may return to more stringent measures.
The weakening of USD/JPY is also associated with forecasts of a Fed rate cut. The Japanese Central Bank may choose several monetary policy paths against the background of introductory factors. On Friday, Japan's published macroeconomic statistics supported the yen's growth. The consumer price index rose from 2.8% to 3.0% in August, and the indicator excluding food and energy prices increased from 1.9% to 2.0%. The September inflation index for the Tokyo region, which will be published on September 27, is expected to slow down to 2.0%.
Japan's financial flows report for the second quarter showed that household assets reached a record 2,212 trillion yen, an increase of 4.6% compared to last year. This was facilitated by the growth in the value of stocks and funds against the background of the stock market upturn, as well as the weakening of the yen, which increased the value of insurance assets in foreign currency.
Technically, on the daily chart, the Bollinger Bands indicator shows consolidation, limiting further growth of USD/JPY in the short term. The MACD shows a confident buy signal, and the stochastic is approaching the overbought zone.
If USD/JPY breaks through the 144.00 mark down, we will get a sales signal with a target of 142.00, we will set the stop loss at 145.00.
A break above the 145.00 level will open the way to purchases with a target of 147.00 and a stop loss at 144.00.