The USD/JPY positioning has remained almost unchanged since yesterday. The pair remains in a narrow price range, since the volatility of currency pairs on the Forex market is low. Investors are not rushing to take new positions waiting for U.S. inflation report (12:30 GMT).
This release is important for the Fed, especially on the eve of the September meeting, as it may affect the prospects for tightening monetary policy. Despite the forecast of an 8.5% to 8.0% decline in the Consumer Price Index, the possibility of a 75 basis point rate hike is above 90%. The Fed is not concerned about the risk of a recession as macroeconomic reports show a solid growth of the U.S. economy.
At the same time, the Bank of Japan has a diametrically opposite position and does not plan to retreat from the "dovish" rhetoric. Moreover, the central bank does not even consider cancelling monetary stimulation program, considering it an important link in the recovery of the economy after the pandemic, though it is concerned about the low rate of the national currency.
USD/JPY Technical Analysis
The Bollinger indicator on the daily chart is still pointing upward, though a narrowing of the price range is visible.
MACD indicator remains in the positive range, but turned down to the zero line and generated a sell signal
Stochastic oscillator is steadily decreasing in the middle of the working area of the indicator window.
After a confident breakdown followed by fixation of the price below the level of 141.50, let's start selling with Take Profit of 138.50. Stop loss is set at 143.00.
Upon a confident breakdown of 143.48, we return to the long position with the next target at 146.00. Protective stop is set at 142.00.