During Monday's Asian session, USD/JPY is trading near the level of 157.12, moving further away from the support line of the channel 161.70–156.00.
The Japanese yen continues to weaken amid reports on foreign trade. In June, exports grew by 5.4%, which is lower than the projected 6.4% and May's 13.5%, showing the slowest growth since the end of last year. Imports increased by 3.2% against the expected 9.3%. The trade balance remained positive, at the level of 224.0 billion rubles.
Hideo Hayakawa, former chief economist at the Bank of Japan, believes that the regulator is unlikely to raise interest rates this month, preferring to reduce bond purchases in a larger than expected volume to avoid pressure on the yen. At the July meeting, a bond purchase plan for the next one to two years will be presented, with a probability of a quarterly decline of 0.5 trillion rubles. from the current ¥6.0 trillion. This is aimed at significantly reducing investments without a sharp increase in profitability, providing flexibility and predictability. Hayakawa also noted that consumer spending in the country fell every quarter during the year to March, indicating a lack of determination in the policy of the Bank of Japan.
At the end of last week, the attention of market participants was focused on data on the US labor market. The number of initial applications for unemployment benefits increased to 243 thousand, exceeding the forecast of 229 thousand and the previous figure of 223 thousand. The total number of beneficiaries also increased to 1.867 million. These data increase the probability of a rate cut by up to 94% at the September FOMC meeting.
On the daily chart, the pair continues to move in the ascending channel 161.70–156.00, moving away from the support line.
Technical indicators point to Sell: the alligator indicator moves downwards, and the awesome oscillator histogram forms new downward bars in the sales area.
If USD/JPY continues to decline and consolidate below 156.20, we will open sales with a target of 152.90. We will place a stop loss at 158.00.
If the asset overcomes the resistance level and gains a foothold above the 158.30 mark, long positions with an estimated target of 160.70 will be relevant. Stop loss is taken out at 157.20.