As a result of the strengthening of the positions of the American currency, the USD/JPY pair corrected to 134.00.
Market participants assess the prospects for the monetary policy of the Bank of Japan under the leadership of the new head Kazuo Ueda, who will replace Haruhiko Kuroda in April. Thus, Finance Minister Shunichi Suzuki said he hopes to see concrete steps to keep inflation at the target levels of 2.0%, support economic growth and increase wages in the country. Recall that 71-year-old Ueda is considered an adherent of the "dovish" rhetoric but has already declared that the regulator will continue the course outlined by his predecessor. Experts believe that to mitigate the transition to a more "hawkish" policy, the current head of the department may take unexpected decisions at the last meeting of the board of governors, for example, to return the interest rate to the positive zone. If this assumption is correct, the asset is waiting for a decrease with a long-term target of 126.90.
The negative dynamics may be slowed down by the actions of the US Federal Reserve, which is preparing to continue tightening monetary policy at the next meeting on March 21–22, and more than 90.0% of analysts suggest that the interest rate will increase by 25.0 basis points to 5.0%, after which, a pause is possible to assess the effectiveness of the measures taken. Experts note that due to the continued strengthening of the US labor market, the regulator will need to act more decisively, and the USD/JPY pair may continue to grow towards 138.00.
The long-term trend remains downwards. The price has reached 134.00 within the correction, but it cannot consolidate above it, which allows the instrument to start declining toward the targets of 130.90 and 126.90. In the case of consolidation above, corrective growth will continue with the target at the resistance of 138.00.
The medium-term trend changed to an uptrend last week with the breakout of the target zone 132.73–132.21, and now the target is zone 2 (138.18–137.61). New asset purchases may be considered on the correction from the key support of the new trend at 129.90–129.40, with the first target at the high of last week at 135.00.
Resistance levels: 134.00, 138.00. | Support levels: 130.90, 126.90, 123.90.