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USDJPY Market Update

10/13/2022 12:59 PM

The USD/JPY pair is actively adding in value and reached the level of 146.90 against the background of the publication of positive statistics from the US.

The Producer Price Index in September rose by 0.4%, exceeding the forecast at the level of 0.2% and –0.2% shown in the previous period, while the PPI excluding Food and Energy added 0.3%, which coincided with expectations of the analysts and the August figure, which corrected from 0.4% to 0.3%. In addition, the minutes of the US Federal Open Market Committee (FOMC) published the day before recorded that the majority of members of the Fed are in favor of further adjustment of the interest rate, as well as keeping the rate at a high level for a certain period of time in order to combat unprecedented inflation, reaching 8.3% year on year. Today, investors will be watching for updated data: the CPI is expected to fall from 8.3% to 8.1% in September in annual terms, while the Core CPI may correct from 6.3% to 6.5%.

In turn, the Bank of Japan continues the "dovish" course of monetary policy. Yesterday, the Governor of the regulator, Haruhiko Kuroda, said that the Bank would keep the interest rate at low levels (now it is –0.10%) until inflation reaches the target of 2.0%, but the official specified that an acceleration of the pace of wage growth in the country is also necessary to implement the government's plan. The next meeting of the Bank of Japan will take place on October 28, and if the rate is still not adjusted, the USD/JPY pair is likely to see further strengthening.

The long-term trend is upward. This week, buyers have reached the resistance level of 146.90, in case of breakout of which, growth will continue to the area of 149.50. Otherwise, one can count on a downward correction with the targets of 144.80 and 141.50.

The medium-term uptrend continues: this week the September high was updated in the area of 145.80 and now the target of growth is the target zone 4 (147.77–147.29). At the moment, the price is close to the target zone, which may cause large players to fix long positions. The key trend support is shifting to 142.36–141.92, and in case of price correction to this area, it will be possible to consider buying the instrument with the target of 147.29.

Resistance levels: 146.90, 149.50, 152.50. | Support levels: 144.80, 141.50, 139.00.

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