The American dollar resumed a fairly active growth against the Japanese yen, recovering from an equally sharp decline last Friday. The USD/JPY pair is again testing 149.00 for a breakout, receiving support from the upcoming US Federal Reserve meeting, which will be held on November 1-2. Forecasts suggest that the regulator will again decide to raise the interest rate by 75 basis points, after which the Fed's rhetoric should soften somewhat. Many board members are already in favor of a more cautious and balanced approach to increasing the cost of borrowing, reasonably fearing the risks of a recession in the US and global economies.
The traders are also awaiting the results of the Bank of Japan meeting, which will be held on October 28. The regulator does not have an issue of raising interest rates; however, the Bank somehow has to respond to a sharp unilateral weakening of the yen, which last week fixed below the psychological level of 150.00. It is likely that the Bank of Japan will again signal the possibility of foreign exchange interventions.
In the meantime, macroeconomic data provide little support to the yen. Jibun Bank's Manufacturing PMI fell from 50.8 points to 50.7 points in October, better than market expectations of a fall to 50.4 points, while the Services PMI showed a modest rise from 52.2 points to 53.0 points, ahead of market forecasts at 52.1 points.
Bollinger Bands on the daily chart show a steady increase. The price range is narrowing, reflecting ambiguous nature of trading in the ultra-short term. MACD reversed downwards having formed a new sell signal (located below the signal line). Stochastic is showing similar dynamics, retreating from its highs, indicating the overbought American currency in the ultra-short term.
Resistance levels: 149.00, 150.00, 151.00, 152.00. | Support levels: 148.00, 147.00, 146.00, 145.00.