USD/JPY Analysis for November 2
After the announcement of the Fed meeting results, USD/JPY rebounded from local highs and is developing a downward correction on Thursday, trying to consolidate below 150.50.
The yen is strengthening on the background of a weakening dollar, despite the weak statistics of business activity of the manufacturing sector in Japan, where in October the indicator fell from 48.7 to 48.5 ppts. It should be noted that the decline is the fifth month in a row.
The Fed expectedly kept the rate at 5.5%. At the press conference Jerome Powell confirmed the presence of inflation risks and noted that the stable labor market allows the regulator to continue, if necessary, the cycle of monetary restriction. However, investors considered the speech of the head of the Central Bank as a hint at a rapid change of the course of monetary policy.
Also yesterday, the US labor market report from ADP was released. Employment in the private sector rose from 89.0 thousand to 113.0 thousand, which was worse than the forecast of 150 thousand.
Investors are waiting for the release of Non-farm Payrolls on Friday.
Technical analysis for USD/JPY for today
The downward momentum does not allow us to speak about the beginning of a bearish reversal. The main forex indicators still favor the uptrend. The Bollinger Bands are moderately directed upwards. The MACD indicator is in a positive range and is holding a buy signal. The Stochastic oscillator is steadily rising towards the 80% level.
Entry into short positions is advisable when the pair is fixed below the key level of 150.00. The sellers' target is 149.00. We recommend to set the stop-loss not higher than 150.50.
If the price consolidates above 150.50, we return to buying with the next target mark of 151.50. In this case stop-loss is set at 150.00.