USD/JPY is near the 153.65 mark, while the yen remains stable due to neutral macroeconomic statistics, which in this case plays the role of support.
The consumer price index in Tokyo remained at 2.3% year-on-year, while the core index excluding fuel and food prices increased slightly from 2.1% to 2.2%. The price index for corporate services increased from 2.7% to 3.0%, which is higher than preliminary estimates of 2.6%. This significant increase in the cost of corporate services indicates a possible continuation of high inflation and provides the Bank of Japan with grounds for tightening monetary policy. According to Reuters, this issue will be discussed at a meeting on July 31. The government's monthly report also indicates a recovery in the country's economy, but a slowdown in export growth may have a negative impact on GDP.
Meanwhile, the US dollar index is trading near the 104.00 level as part of a corrective trend. The American currency practically does not react to macroeconomic indicators, as the internal tension in the United States is so great that traders are in no hurry to open new positions, waiting for additional signals from the authorities. Recently, President Joe Biden explained in his address to the nation the reasons for his refusal to participate in the elections and confirmed his intention to serve as president until the end of his term. This event distracted attention from the GDP report, which showed economic growth in the second quarter to 2.8% from 1.4%, as well as from labor market data, which recorded a decrease in the number of applications for unemployment benefits to 235 thousand from 245 thousand.
On the daily chart, the pair has moved beyond the multi–month ascending channel with the boundaries of 163.00-156.00 and continues to decline.
The indicators suggest a sale. The fan of the average alligator indicator has correctly opened downwards, and the awesome oscillator indicator forms descending bars in the sales area.
If the asset continues to decline and consolidate below the key support level of 153.00, we will open sales with a target of 150.80. We will set the stop loss at 154.00.
We will consider purchases if the pair overcomes the resistance level and continues to grow, gaining a foothold above the 154.70 mark, we will designate 157.70 as the target. We will put the stop loss at 153.00.