Last month, USD/JPY broke the psychologically significant level of 150.00 and, in the middle of this month, again approached the record high of 151.95 reached in October 2022.
However, over the past three incomplete trading weeks, including the current one, USD/JPY has been actively declining, touching the level of 147.15 last week, the lowest since mid-September. As of writing, the pair was trading near 148.65, in the zone of a short-term bearish market, below important short-term resistance levels of 149.58 (200 EMA on the 4-hour chart), 149.29 (200 EMA on the 1-hour chart).
Nevertheless, despite the correction of almost 400 points, USD/JPY maintains a positive momentum, trading in the area of a sustainable bullish market, above key medium-term and long-term support levels of 145.40 (200 EMA on the daily chart), 145.00, 144.00, 143.60 (144 EMA on the daily chart), 131.50 (144 EMA on the weekly chart), 128.00, 127.50 (200 EMA on the weekly chart).
At a press conference following the recent Fed meeting, Federal Reserve Chairman Jerome Powell said that given the already covered distance and the current uncertainty, the regulator will act cautiously and make decisions based on a combination of all data and risk balance. Powell's position on the need for further tightening of monetary conditions was seen by market participants as cautious, leading to a weakening of the dollar amid its sales.
The main role in the dynamics of USD/JPY at the moment is played by the dollar. In this regard, it will be interesting to hear Powell's opinion on Friday regarding the near-term prospects for the credit and monetary policy of the U.S. Central Bank.
Considering the fact that USD/JPY continues to trade in a bullish market zone, in the medium and long term, preference should still be given to long positions, although in the short term, a new wave of corrective decline is possible.
In the main scenario, we expect a resumption of growth. The first signal for this could be a breakout of today's high at 148.82, and the confirming levels of resistance are 149.15 (50 EMA on the daily chart), 149.29 (200 EMA on the 1-hour chart), 149.58 (200 EMA on the 4-hour chart).
In an alternative scenario, a signal to open new short positions could be a breakdown of the local support level of 148.00 and today's low of 147.95.
If the downward correction does not stop near the current levels, the decline may continue to the local support level of 145.00 and key support levels of 144.00, 143.60.
Further decline will lead the pair into the zone of a medium-term bearish market.
Support levels: 148.00, 147.95, 147.00, 146.00, 145.40, 145.00, 144.00, 143.60, 143.00
Resistance levels: 148.82, 149.00, 149.15, 149.29, 149.58, 150.00, 151.00, 151.70, 151.95, 152.00, 153.00
Trading Scenarios:
Buy Stop 148.90. Stop Loss 147.90. Targets 149.15, 149.29, 149.58, 150.00, 151.00, 151.70, 151.95, 152.00, 153.00
Sell Stop 147.90. Stop Loss 148.90. Targets 147.00, 146.00, 145.40, 145.00, 144.00, 143.60, 143.00
